Two Way Hard Three | Las Vegas Casino & Design Blog

Posted by mike_ch

I'll just expand on what I said to Detroit over Twitter:

I find "everything will open and the 10,000 rooms they add will be absorbed and room rates will return to record high levels" to be amusing. I'll take one of the three, but all of them at once seems absurdly optimistic.

He glosses over a lot of stuff that isn't relevant to his business but still critical to making his rosy vision a reality, such as resource control and infastructure. He says that people driving from SoCal to Vegas "want to take their cars" like passenger rail service wasn't discontinued over a decade ago, airfares to Vegas aren't tweaked all over the map to McCarran unlike other cities, and people simply chose driving over some equal alternative that doesn't exist.

As much as I disliked the Frontier, Ruffin is actually one of my Good Guys as far as Strip management is concerned, because he has no shareholders and therefore no need to shortchange the customer's experience to give more to people holding stock. But his piece is so "meet the new era same as the old era" that even things he admits would be useful (train) he doesn't think can happen because he sees everything remaining exactly the same.

I would at least hope that if business turns out as big as he thinks it will be that things don't just stay the way they are. A whole host of changes need to be made to make sure the next recession doesn't hit the state as hard as this one has.

I knew before I clicked on this article, who would be the first to respond. And I knew you wouldn't agree. I'll just say that Phil is a REALLY smart guy, and I'll leave it at that. Why nobody can predict the future exactly, I tend to listen to what Billionaires have to say.

Posted by Hunter

I agree he's super smart and he's done quite well with some excellent timing.

My complaint is that he doesn't really say anything substantive in this piece. I almost wonder why he wrote it or why they published it.

Ruffin's the kind of guy that if he truly did have insights or secrets, he'd keep them to himself so he could profit from them.

It just seems strange that this piece even exists, give it's lack of content.

Ruffin sounds like a super salesman. He's saying everything we want to hear, but I agree with Hunter, there is no substance in his statements,
This is not verified, but a friend told me Ruffin has closed quite a few floors in TI because he can't let the rates go any lower.

Its interesting, because as a shareholder of many of these companies I want to see business get better and rates increase. But that's a double edged sword, because on the other hand, 20+ members of my family is coming to Vegas on a huge group trip this summer, many of which don't have a lot of extra money, and I just can't see rates going up anytime soon, if anything, I think 2010 summer rates might be lower than 2009. Its great from a visitors perspective to be able to take these trips, and stay at 5 star places, for 3 star prices. I think Vegas still has its best days ahead of it, but that won't happen for several years, not until we get people back to work in this country, and get them all spending money.

I got a couple issues here, and I hope our smart fellowship can help me out.
How are we going to increase visitation by 25% when all ways to travel into town are currently at 90% or more of capacity now? The mountains betwen LA and Las Vegas make me think the cost of rail service will always be exhorbitant, and I don't see how any new technology will solve the major issue of the extreme grade changes. Trains can't make anywhere near the steep inclines that cars or trucks can.
I would think that widening the highways would be the most economical way to increase travel from SoCal, yet I don't know if Nevada or California doesn't want to foot the bill, or both. I would think that tollways could be the solution, yet people in the West seem to have a strong averson to them (which I just don't understand, since they're all over Oklahoma and work very well).
McCarran Airport appears to be maxed out, so this would be the time to move quickly on Ivanpah, yet it gets no mentions lately and I wonder if the economy is slowing it up, if not stopping it.
Oh yeah, let's not forget that all the fuel pipelines are maxed out also. So there is currently no way to get jet fuel or gasoline into Las Vegas to support 25% more visitors.
Does Las Vegas really need 25% growth in the next decade? Seems to me that the last 20 years have been so supercharged that letting the County grow into inself would be a smart move.
This feels like a ranting question, so I'm sorry for that, but I'm too tired to rework it and I don't want to delete it all. So, thank you all in advance!!!

Jeff--I took a few pics of a huge new terminal under construction at McCarran, because I just couldn't believe my eyes. Many here were no doubt aware of it but I was surprised and immediately thought of all that Ivanpah talk from last year. You're right that recent growth rates are absolutely unsustainable and "growing into itself" would only make sense. Traffic is insane (I rented a car for the first time) and could only get worse given the total lack of planning, and BTW tonight's "60 Minutes" had the Governator talking about the water crisis next door in Cali, which we've already discussed here in relation to Nevada and water credits.

Vegas is the ultimate supply & demand town, and these corporations will find an equilibrium. I share Brian's faith but not his enthusiasm for the mad gold rush economy of the recent past.

Interesting - the first thing I thought after reading this was "what about the water?" - which I then noticed was referenced multiple times in the comments section. He didn't mention any of the risks that could derail his 'vision'.

I'm sure that people back in 2005 were bullish on the outlook for 2009-2010 (just ask MGM....or Boyd....or Fontainebleau).

Obviously, he's going to have a positive outlook for the strip, otherwise he would've taken the money from the sale of the Frontier and ran.

Posted by mike_ch

Jeff: Well, the maglev could handle the mountain inclines. It's going to require the federal subsidies and all the other payments that any normal mass transit project has, not this "look, the private free market can build it (badly) on it's own!" thing that we tried with the Monorail.

An Amtrak line connecting Vegas to LA existed at one point, but the Desert Wind ended in 1997 as part of a bunch of cuts to Amtrak. It's slow, made even slower because Amtrak doesn't own any of the track and has to keep pulling aside for Union Pacific and other freight trains to go on ahead.

I avoided getting too political in the last page, but if we're going to get a train it's probably going to require help from Washington, and it'll be fun to see posturing and watch major figures from one of the political parties (guess which one) start putting down Las Vegas and yell about federal stimulus for casino tourism. But really, the train is necessary for sustainability once oil decline becomes a reality.

I've been on the bullet trains in Japan, I've seen them in Europe, I just don't know why this country is living in the stone ages, when it comes to somethings. Everyone talks about how advanced our society is, yet that's one example where we are decades behind many other countries, our cell network is another, its years behind other countries. I really thing with all the hundreds of billions we waste in this country on a yearly basis, we could spare $10 Billion here and there to build these systems. I'd love to see a Mag-Lev system between LA and LV, and I think a line from LV to Phoenix could be a big hit also. But with all the red tape and bullshit from our government, I won't hold my breath anytime soon on anything happening. I have ZERO faith in everything with it comes to our United States Government.

Posted by mike_ch

Brian: Well, I once made the same argument that you did in another of our forums, about us compared to other countries when it comes to access to the health system, and if I remember it right you then asked me if I was a socialist. And I only bring that up because that's the kind of thing you'll run into regarding these trains.

Pretty much no method of transportation in this country is cost-neutral (even the roads network doesn't pay for itself in use taxes) and federal funding for a mag-lev is going to run into accusations of being a government gift to the casino industry, which is still a third-rail in politics. The best privately-run passenger rail in the world ride now is East Japan Railway (aka JR East, aka what most foreign tourists consider "the train" when they visit Tokyo), and it's originally a government-run service that was eventually privatized after the initial infrastructure was built.

I'd like to see it happen, though, since the state is a "swing state" any party that starts shouting that Nevada deserves nothing because it has gambling (as some conservative politicians did about a year ago, calling the train "The Sin City Express") is likely to tip it to their opposition. You'll also run into some of the same points you've given to me the past year: "But what about the national deficit?" / "Isn't this socialism?" etc.

This is why it's so hard to do these things, but I'm rapidly veering off into issues that aren't fit for this venue, so I'll just bring it home. Maybe some day if we meet again we can have a political discussion over lunch or something. We disagree on so much already and keep talking to each other, so it probably can't hurt. :)

I appreciate the criticism of transport infrastructure, but looking at other countries and saying "why not us?" doesn't tell the full story. Rail works in a place like Europe or Japan because you have old cities and infrastructure built around transit hubs, because most of it was developed before widespread auto use. It's cultural ingrained there. The American South West is practically the complete opposite of that, most of it it developed at a time when the automobile seemed like the answer to our problems.

The best way to do it would be to build it right to the strip or McCarran (or very close) and from a hub somewhere in SoCal. (Maybe LAX, somewhere easy to drive to with plentiful parking). Unfortunately it would be virtually impossible to do that. Inevitably, opposed property owners, NIMBYS, cities, gov, etc. will mean it will have an illogical path and inconvenient stations that require too many hoops to jump through to make it cost viable and convenient for potential users.

You're talking about connecting two very auto centric cities with mass transit, with a broke state on one side, and a low tax, hands off government on the other side. very difficult, to accomplish.

mike-

"I avoided getting too political in the last page, but if we're going to get a train it's probably going to require help from Washington, and it'll be fun to see posturing and watch major figures from one of the political parties (guess which one) start putting down Las Vegas and yell about federal stimulus for casino tourism. But really, the train is necessary for sustainability once oil decline becomes a reality."

Yeah, and hopefully we'll get the stimulus money for the train... Although I fear the train now more likely to get the money is Sig Rogich's "DesertXpress" gravy train. But hey, even that will at least be something if he's being honest about reaching an agreement with the CA High Speed Rail (CAHSR) Authority to connect DesertXpress' Victorville terminus with the Palmdale-to-LA CAHSR line. I'm still wondering if a lot of tourists will be willing to make at least one (possibly two) train change just to get from LA or OC to Vegas (and vice versa), but it's at least better than the thought of leaving tourists from Vegas stranded in Victorville while tourists from Cali have to drive at least 90 minutes from LA or OC just to get to the train station.

Jeff-

That's why maglev is still the best available solution. A maglev system can handle the terrain. And if operated correctly, a one-way ticket from OC (Anaheim) to Vegas can cost under $60.

Again, it's just too bad it may be killed by political warfare. I guess I can't fault Harry Reid and other big Nevada pols too much for waiting and waiting and waiting while the pro-maglev folks couldn't get their sh*t together, but it's just nasty to see how Sig Rogich bought off so many pols (in both parties) for DesertXpress.

Give me ANY realistic math that can make a maglev ticket from Anaheim to Las Vegas cost $60 without a massive subsidy. For that matter, give me any non-subsidized rail service from LA to Las Vegas for as little as double the price of a Southwest Airlines flight.
BTW, anyone here got any idea what the G forces of normal highway grade elevation changes will feel like to maglev riders at the 4x plus multiple speeds? This is not a smart aleck question. It would seem to me that it would be like a roller coaster and I am very curious about that.

Jeff-

Well, that's the pricing the maglev backers put out... Actually, they were proposing $55 tickets. And since the maintenance costs for maglev are less than traditional rail lines, it may be possible.

And hey, after taxes and extra "fees" that Southwest flight doesn't really cost $50-60 (more like $70-90).

Now I haven't seen much research made public so far on the feel of the maglev line going uphill and downhill... Especially since the only major maglev experiments so far have been mostly flat areas (Berlin, Shanghai, et al). Still, I'd think there'd be technology available today to make the ride easier. I'll have to do some more research on that.

Posted by mike_ch

atdleft: Anyone familiar with transit at all knows you don't always get from where you are to where you want to be without making a connection. I know San Franciscans who don't like Vegas at all but kill a few hours every year at McCarran, using the free wi-fi and trying to block out the noise of the slots, because McCarran has a lot of non-stops to places SFO doesn't.

I'm fine with going to Palmdale instead of directly to Anaheim, myself. If CA-HSR ever happens, getting to Anaheim or where-ever wouldn't be a problem anyway.

Jeff: "Give me ANY realistic math that can make a maglev ticket from Anaheim to Las Vegas cost $60 without a massive subsidy. For that matter, give me any non-subsidized rail service from LA to Las Vegas for as little as double the price of a Southwest Airlines flight."

That's the thing. No form of transportation operates without a subsidy. Airlines were bailed out already years ago, roads only pay for a bit of their costs with use taxes (tolls, car taxes, etc.)

Comparing something to an airline and saying "no subsidy" is a bit unfair because the whole air system is pretty well subsidized/regulated. If you want to work as an Air Traffic Controller, the US Government is your one and only choice for an employer barring leaving the country.

Posted by mike_ch

BTW, "oooo00" suggested LAX as an LA hub.

If you're really going into LA proper, you'll have a much easier time using Union Station, which is supposed to be the city's train hub anyway for both LACMTA local rail and the Metrolink commuter trains.

What LA's train system ISN'T well connected to is, oddly enough, LAX. Riding rails from there to downtown requires going through the visitor-unfriendly Blue Line through Compton and the like. Fortunately, LACMTA at least recognizes the situation (unlike RTC which can't seem to figure out anything to get tourists to the airport), and runs a bus called Flyaway that runs between Union Station and LAX. It's how I get in and out of LA if I have to be there.

mike-

Oh, I know all about connections. And since you and I are familiar with the way mass transit works, we're OK with DesertXpress possibly requiring a separate train to connect Victorville to LA. I'm just concerned about all those possible riders that may not use DesertXpress if they think it's "too
complicated" and takes too long. That's why RTC and OCTA (in Orange County,
where I'm originally from) don't have as high ridership as, say, MUNI & BART in Greater SF.

And btw, good point on airline subsidies! Just how many "big guv'mint bailouts" have they received in the last 30 years since they were "deregulated"? I probably shouldn't get too "political" here, so I'll just end this rant by saying that the airline industry wouldn't be making any type of profit without "government bailouts" of some sort, so why shouldn't we actually spend our tax dollars on something more useful, like a high-speed rail line FINALLY connecting SoCal to Vegas?

Guys, really. People in the United States, especially the West, don't want to ride passenger trains. They'd rather fly or drive at a much higher percentage. Roadways are paid for with gasoline and other use taxes at the highest transportation level in the world. Commercial air travel in the U.S. pays taxes that are roughly the same amount of any "subsidies" received.
Do you really think a lot of people in the Cal-Nev area want to ride a train to Las Vegas? I'm guessing that 1 in 200, or 0.5%, want to ride any passenger train, Maglev, or otherwise. Can anyone give me a financial model that makes the rail service make sense?
Again, this is NOT a smart aleck, or combative, question.

Posted by mike_ch

Jeff, why do you think that is? Compare Hong Kong's international airport with JFK or LAX. Compare many European and Asian train stations to Penn Station, which was once a gorgeous train station that today looks like this because somebody had the great idea to tear it down and build Madison Square Garden on top of it.

Trains aren't for all purposes. I wouldn't ride coast to coast on one, but they are for

I mean, don't get me wrong, I love air travel too. I just flew back to Vegas from what is practically a hobbyist airport on a cramped Bombardier turboprop plane and loved every minute. But trains, especially fast trains, are perfect for medium-length journeys like LA-Vegas.

Nobody would want to ride a train for over five hours, otherwise they'd just take a plane. But if trains took the job of these little commuter planes that get up in the air and land a moment later, doing flights like LA to Vegas or NYC to Buffalo or Miami to Tampa, it'd mean cleaner air and a less crowded airspace.

And if you think "a less crowded airspace" isn't important, go talk to an Air Traffic Controller. Especially one at McCarran, where there's so much activity that planes practically have to line up all the way over Lake Mead for landing clearance.

Towards the end of the article there is mention that online gambling isn't going to be too big of an issue. What are your thoughts with online gambling?

Surely casinos will figure a way to interact with online customers as well as floor customers.

I would love to take a train from LA to Vegas. I think anyone that has done the drive on a Friday and returned on a Sunday would also feel the same way. Imagine getting out of work on a Friday, meeting up with friends at the train and relaxing for a few hours on the trip to Vegas. So much better than going insane stuck in traffic in the car or the current frustrations that everyone faces at LAX.
I agree with mike_ch that we need more train routes that fit into the under 5 hour car drive corridors. It will take time, a decade or more, but it will work.

My bet is that the piece ran because they told Ruffin that if he wrote it, they would run it. (I've been in a similar situation and ended up running what I considered a sub-par piece because of a similar promise).

I posted my extensive thought on rail over at http://www.dieiscast.com/2009/12/29/book-review-waiting-on-a-train/
(which might sit in moderation for a little while, so check back).

I'm going to buck Ruffin on downtown. Don't get me wrong... he has nothing to worry about buying on The Strip like he did. When CityCenter struggles (to mee the over-lofty original expectations) and MGM has to dump another property, Ruffin should snap it up. No arguments there.

However... as we pull out of the recession, all of the high-rise condos will fill up with upscale people. And you have the brain institute and performing arts center and Mayo plus the slow but steady progression of Fremont East.

Build on top of that the "urban desire/live-work-play" that is (or has) taken over many cities such as my hometown of PDX and downtown will really come into its own.

As that happens, downtown hotels will upgrade and go more upscale. Bellagio upscale? No. Funky, artsy, "downtownish" upscale. Maybe a little boutiquish without losing a touch of the grit that makes it so wild and fun and real.

A threat to The Strip? No. But something that stands on its own without being looked at as the red-headed step-child? Absolutely. Forget about 2015. You'll see the transformation starting to kick in by 2015.

PS This is completely unrelated, but nothing should be read the lighter-than-usual crowds on The Strip last night (NYE). It was DAMN cold. Visitors stayed inside to watch the fireworks in Hi-Def (or stuck their heads out of the hotels just before midnight).

And... the cold kept throngs of locals away. The traditional temps in the 40's are bad enough for us with warm desert blood. The 30's are ridiculous.

The fireworks were spectacular, but with no surprise: No one has come out with this, but I could swear it was the SAME show (including same soundtrack) that Station Casinos used on July 4. I was watching the KTNV coverage on my DVR today (online at http://www.ktnv.com/global/story.asp?s=11755879 ) and the soundtrack was ringing a bell. Listen to how all the songs sound like they were themed for July 4. And... I remember the sequence of the fireworks as being similar. No wonder it only took Grucci four days to set up. They had done it before 6 months earlier off the tops of all the Station Casinos around town!

Best online quality of the fireworks? KLAS http://www.lasvegasnow.com/Global/category.asp?C=28259&clipId=4426962&autostart=true