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What happened to the Vegas development boom?
April 19 2011

Want to place a wager on how many hotels the nation’s largest hotel market has under construction?

  • The largest hotel market in the U.S. only has 96 hotel rooms under construction.
  • There were more than 9,000 rooms that came online during 2009.
  • While ADR plummeted in the face of new supply and the downturn, demand has remained relatively unchanged.
By Patrick Mayock

Sometimes you come across a data point that makes you do a double take—or, in the case of my perusing STR’s latest U.S. pipeline numbers last week, almost choke on your turkey sandwich.

Have you cleared your airways? Here it comes: There are only 96 new hotel rooms under construction in Las Vegas.

Only 96! In Las Vegas! The country’s largest hotel market!

This is Sin City we’re talking about here, people—the desert oasis that saw a development boom that injected 9,104 rooms into the market during 2009. Granted, it’s not New York City, which has more than 6,000 rooms under construction, according to STR’s March pipeline, but nobody’s been able to measure up with the behemoth Big Apple for years now.

 CityCenter added nearly 6,000 rooms to the Las Vegas hotel supply in December 2009.

So back to Vegas … only 96 rooms … wow.

To put things in perspective, Las Vegas has half as many rooms under construction as Detroit, one-third as many as Anaheim, and one-fourth as many as Oahu Island.

Now maybe I’m blowing things out of proportion here, but I can remember a time when seemingly every story coming out of Nevada concerned the crushing influx of supply in the market. CityCenter alone accounted for nearly 6,000 hotel rooms in one month, while another 3,000-room project, The Cosmopolitan, loomed on the horizon. The year was 2009—a 12-month span when demand was plummeting like the luck of a novice card shark at the Black Jack table. “The market would never be able to absorb the supply,” several pundits said, while others hurled charges of cannibalization.

Were their claims justified? Partially so. While total room nights occupied fell only 2.3% during 2009 (including a meager 0.4% drop during December when CityCenter came online), ADR took a 22% nose dive, according to the Vegas CVB.

Room nights occupied improved 3.3% during 2010, while rates increased 2.0%.

Through February 2011, total room nights occupied is up 6.8%, and ADR is up 4.6%.

So while it certainly didn’t help matters during 2009, Vegas’ development boon doesn’t seem to have had a devastatingly lasting effect on the market (at least none more so than would have been the case in the face of an unprecedented global economic downturn).

Still, I’m sure area hoteliers have welcomed the respite during this 96-room lull. With an additional 3,071 rooms in various stages of planning, according to STR, they don’t have very long to catch their collective breath.

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