Is the law of supply and demand catching up with casino hotels in Las Vegas? Binion’s hotel downtown is closing, which may be a sign of things to come if casinos aren’t able to raise their room rates and/or maintain high occupancy. From the LV Sun:
Binion’s Gambling Hall & Hotel in downtown Las Vegas will close its 365 rooms on Dec. 14 and lay off about 100 workers.Spokeswoman Lisa Robinson said the decision was made as a result of the economic downturn, which has decreased occupancy at the property and other hotels across the Las Vegas Valley.Robinson said Binion’s also will close the Binion’s Original Coffee Shop and discontinue keno. The casino, sports book, poker room and Binion’s Ranch Steakhouse on the property’s 24th floor will stay open.Robinson said the decision was made Friday. She said Binion’s hasn’t determined when the rooms might reopen.
With an impressive amount of high-end room supply due to come on the market, there will doubtless be pressure on everyone to remain competitive. If B-class properties are going for $80 a night and C-class properties are going for $30, it’s hard to justify spending $25 to stay in a D-class property. If room rates fall throughout the market as they have, at some point the cost of keeping rooms open exceeds the revenue they generate, and they will have to close.
This is a slight contraction in supply–just about equivalent to what Harmon will add when it opens–but it doesn’t bode well for the market. At least one operator is sufficiently pessimistic about the near-term future to take this extraordinary step. It wouldn’t surprise me to see more partial shut-downs like this before things turn around.