No Rest for the Wicked: Las Vegas Faces Falling Traffic


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Michelle Grant, Euromonitor’s Travel and Tourism research manager, explains how the tourism industry in Las Vegas was harshly impacted by the economic recession. Visitation to the city dropped as travelers cut back on discretionary spending. The so called “AIG Effect” also had an impact on the tourism industry there. This effect is a result of a 2008 event when AIG Insurance executives spent about a half a million US dollars at a lavish retreat in California – one week after receiving a federal bailout. There was significant public outcry, and, as a result, lavish resort settings for company retreats were seen as taboo. As companies sought to avoid negative public perception, they cancelled many conventions and retreats in Vegas.

More hotel rooms were becoming available during this time – causing hotel chains to lower prices because inbound visitors were so low. As a result, bargain prices were seen at many hotels, but even when tourists took advantage of these prices, they didn’t spend as much money as they would during non-recession years.

2010, however, seems to be a turning point for the city. Visitation is steadily growing, although slightly. Economic recovery in the US also plays a big part into recovery for the city. If the economy recovers, the tourism industry in Vegas will most likely grow faster. The AIG effect seems to have worn off, and more business travelers are on the road. However, the scrutiny on expenses is expected to remain, and as a result, people may still spend less.

One bright spot for Las Vegas is that McCarran International Airport is expanding, adding 6 international gates. Vegas has always attracted international visitors, and the city has been proactive in luring direct flights from around the world. These international travelers may very well make up for the slower growth in domestic visitors.

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