I'm in Vegas at a Southwest Regional Transmission meeting and while I think discussions of loop flow studies are pretty exciting, you can understand that I occasionally lose focus.
Naturally, when my mind drifts, my thoughts shift to gaming. Economists claim that gaming is recession proof, but like so many economic rules that have been rewritten in the last few months, this on is obsolete.
My four-star hotel was $65; the cab line that usually takes me half an hour was non-existent, even the traffic seems lighter.
This only confirms something that's been on my mind for quite a while now. The picture above is the new luxury hotel and casino going up just east Scottsdale. I intentionally waited until is was raining to take the picture.
You may have caught this article covering the ceremonial placement of the final steel beam at Casino Arizona.
A two-year, $400 million project to bring a resort casino to Salt River has punctuated the community's horizon with a 15-story steel skeleton that will become a 497-room hotel tower.
For the last year or so I've watched the progress on the this project and had only one thought...what a disaster.
Indian Gaming used to be incredibly efficient. I mean there's something about putting 400 slot machines in a tent in the middle of one of the largest American cities that just screams gold mine.
But while Indian Gaming is by no means a fad, it seems to be following the normal product life cycle and as the number of casinos reaches a saturation point and the novelty of having slot machines in your back yard wears off, the industry has reached a maturity phase and may even be tipping to decline.
Add to that natural cycle the economic turmoil currently gripping the country and then factor in one more thing. There seems to be a "back to the basics" humility that comes from so many people taking such an economic drubbing. Just like gym memberships soar every January as people realized they indulged too much over the holidays, it seems like people are realizing that over the last couple decades, they have lived beyond their means and they have decided to be happy with a slower lifestyle. That new attitude isn't very compatible with a trip to Casino Arizona.
Now I'm sure that a fancy banker has a power point presentation that shows what a success the project is going to be and I've been assured that the banquet hall is already booked for the first two years. And there's nothing more opaque than the financial numbers behind Indian Gaming; none of us know how much money they really earn, or what the proformas for the hotel look like, but frankly the project doesn't make sense to me.
Indian Gaming has a competitive advantage because it has low transaction costs--locals don't have to travel far to play the games, so the fact that the gaming is not as good as Vegas (no craps, six deck shoes, continuous shuffle) isn't a huge problem. No one travels to Phoenix to gamble on the reservation. If they have to fly in, they go to Vegas.
So what does the resort add? Headaches.
Running a luxury resort is a very difficult and highly competitive business and this sentence from the article doesn't inspire confidence.
The unbranded hotel will be operated by Casino Arizona, the tribe's own gaming enterprise.
Nothing against the Tribe, but it takes a highly specialized expertize plus national economies of scale to run a successful resort hotel. The City of Phoenix has built a new hotel, but they don't run it. The hotel bears a Sheraton brand and is run by Sheraton's staff which allows it to tap into a vast array of national--and indeed international--resources.
Maybe I'm wrong. Maybe the combination of location, gaming monopoly, and luxury amenities--like the proximity to Talking Stick Golf course--will give the new Casino Arizona a competitive advantage when compared to some of the aging Scottsdale resorts and they will be the ones that are in financial trouble.
Maybe. But I remember the buzz when folks announced the construction of the Scottsdale Galleria. Nothing would be able to compete with its chic design and million gallon aquarium. The newly-remodeled Fashion Square was doomed and Scottsdale would never be the same.
Well, the investors were never the same.
Maybe those bankers flew in from New York with their fancy power point display and sold the tribe a bill of goods. It wouldn't be the first time that's happened.
Well, I have never spent a penny at a gaming machine in an Indian casino - and have no plans to begin....the same is true of Las Vegas - that's probably why my house and cars are paid for....
Posted by: ron | January 13, 2009 at 10:59 PM
You may be right, Greg. I also have never been to an Indian casino, but I drive past Casino Arizona every day. It always amazes me that the parking lot is always full, day or night.
Posted by: TS | January 13, 2009 at 11:38 PM
"it takes a highly specialized expertize plus national economies of scale to run a successful resort hotel"
Really Greg, I just figured it would take some people who know how to provide good customer service, but maybe that's a specialized expertize. I only worked at hotels in college and between real jobs occasionally and it never really seemed that complicated to me.
Posted by: Thomas | January 14, 2009 at 09:46 AM
How about the complete lack of architecture and any sensitivity to the environment in which it stands. Who will ensure that additional development on the reservation is done responsibly? That thing sticks out like a sore thumb for 25 miles in any direction and the activities that occur in it will damage many families. Tear it down!
Posted by: Blackbird 03 | January 14, 2009 at 01:08 PM
Au contraire, loop flows are exciting while gambling and gambling economics studies are exercises in tedium.
Posted by: spitz | January 15, 2009 at 03:12 PM