Warnings Confirmed

No, the slowdown that I saw in my recent trip to Las Vegas (see post below) wasn't the product of imagination. According to the WSJ:

The industry is facing what insiders and analysts call its biggest challenge in years. Rising gasoline prices, the housing crisis and other economic troubles are prompting consumers not just to gamble less, but to spend less at the luxury boutiques and restaurants where casinos draw most of their profits. Struggling airlines are cutting service to Las Vegas. And pressures are building on casinos that cater to local residents, who have been hard hit by economic troubles.

"This is the toughest environment we've faced," says Gary Loveman, chief executive of global gambling giant Harrah's Entertainment Inc., referring to the economic challenges roiling the entire industry.

And Main Street Station, the casino where we stayed, is owned by one of the companies that undertook an ambitious spending plan just as the market turned south:

Among those hard hit by the local decline is Boyd Gaming, started in 1975 by Sam Boyd and his son, Bill. The publicly traded company is bidding to become a big player on the Strip, via a $5 billion casino development on 87 acres. The project, called Echelon, is slated to include five luxury hotels, a retail promenade and an exposition center.

Boyd is committed to funding $3.3 billion of the project, through a $4 billion credit line and its own cash. Despite the economic pressures and project costs, company officials say, Boyd has solid cash flow and a strong balance sheet. But Boyd has had to rely more on its credit facility as profits wane. Boyd reported a $32 million loss in its latest quarter.

I'm glad I grabbed all the freebie meals that I did. They may not be there the next time.