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LAS VEGAS -- Casino resort developers are continuing to ratchet up the stakes in furious game of one-gunmanship with a bevy of new projects that will bring the most expensive resorts ever conceived to the Strip. Billions are literally at stake since there is more than $30 billion in projects under construction right now and dozens more on the drawing board. With so much new product set to flood the market during the next four years conventional wisdom says someone is going to lose a lot of money.

While some older properties will take a hit, chances are those will be the next ones to be imploded to make way for another generation of bigger and better mega resorts. For the current crop of projects, experts are saying the odds are once again with the house as this market has the potential to keep casino companies in the black for years to come.
   The decision for so many projects to move ahead is based on an almost perfect storm: Occupancy is robust, ADR is booming and players are leaving more money at the tables. According to the Las Vegas Convention and Visitors Authority (LVCVA), occupancy so far this year is at 90.5 percent overall, while on weekends 95.3 percent of rooms are filled. That’s fueled an ADR growth of 16.8 percent during the first half of 2006 alone. At the tables, people’s pocketbooks are 12.2 percent lighter on the Strip than compared to last year as well.
   “Las Vegas is a real development hotspot. When a marketplace is at peak occupancy and average room rates are going up, the market is optimized and developers want to build there,” said Patrick Ford, President Lodging Econometrics, lodging real estate specialists based in Portsmouth, NH.
   According to Ford there are 18 projects under construction with 18,549 rooms while another 21 projects (14,472 rooms) should start construction during the next 12 months. He said three small hotels will open this year while 15 hotels (6,406 rooms) will open in 2007, 13 projects (5,117 rooms) will open in 2008 while an incredible 35,978 hotels at 28 hotels will debut in 2009 and beyond.
   By 2010 there will be 170,000 hotel rooms, up from 140,000 today.
   Bruce Batlin, SVP with PKF Consulting, said he isn’t surprised by the current Las Vegas construction boom. It’s simply the status quo in America’s most unusual market. “This is one of those weird destinations that continues to evolve at a very fast pace. Las Vegas literally changes in five year increments while other markets like Hawaii or Cancun take 30 years to change.”
   Batlin believes the reason for the rapid replacement of product is that Las Vegas is an adult theme park which continually needs to add new attractions to reenergize demand. While he said some mistakes will be made -- such as the MGM Grand’s original focus as a family friendly destination replete with a mini theme park and Wizard of Oz Theme -- there is enough money moving around for gaming companies to recover after an occasional gaff.
   “The properties have to continue to evolve. But as long as they build high quality, interesting and diverse properties they will do fine,” Batlin said.
   At the LVCVA, President and CEO Rossi Ralenkotter said the market continues to draw record volume. "Las Vegas continues to reinvent itself, and we're charting record numbers of visitors year upon year," Ralenkotter said. "New projects in the planning stages or under way will ensure Las Vegas remains the world's premier leisure and business destination."
   Ralenkotter said Las Vegas reported record visitor volume of 38.5 million people in 2005 and more than 39 million people are expected to visit the city in 2006. The city hopes to attract 43 million visitors to the destination by 2009.
   Next generation projects rising in the desert make the current crop of billion dollar mega resorts look tiny. First up is Project CityCenter, a colossal $7 billion resort complex set to open in 2009 smack dab in the heart of the Las Vegas Strip. MGM MIRAGE’s Project CityCenter is the largest privately financed project in the country and is billed as a “master-planned urban complex defined by a variety of avenues, places and experiences.” The first phase will include the construction of a 60-story, 4,000-room hotel/casino, three 400-room non-gaming boutique hotels to be operated by hoteliers not currently represented in Las Vegas, approximately 500,000 square feet of retail shops, dining and entertainment venues, and 1,640 units of luxury condominium, hotel/condominium and private residence clubs. It is rumored the five-star brand Mandarin Oriental will manage one of the hotels.
   Boyd Gaming is set to build the $4 billion, 5,300-room Echelon Place featuring the 3,300-room Echelon Resort hotel, a 400-room Shangri-La Hotel, a 1,000-room Mondrian Hotel, and a 1,600-room Delano Hotel. Echelon Place is scheduled to be completed in 2010.
   Other more notable projects in the ground right now are a pair of expansion projects: The $1.7 billion Encore at the Wynn Las Vegas and Palazzo, a $1.6 billion sister property to be interconnected with the Venetian.
   As for the fate of the older hotels which aren’t scheduled to be replaced, Lodging Econometrics’ Ford said its not possible to have new supply enter the market without other properties getting hurt. “People flock to what’s new and flashy. It always happens and people will be brand loyal only until being stimulated to do something different. Newness usually wins out,” said Ford, who noted the oldest properties will get hurt the hardest.
   According to PKF’s Batlin, the only thing that can really put a permanent damper on the market is infrastructure. He worries about whether highways, mass transit and McCarran airport can continue to bring in ever more people to fill the expanding pool of rooms. If they fail to do so, it could mean a topping off to this now robust market.
   This year alone the airport had 22,549,725 arrivals and departures. In 2005 44,267,362 went through the airport.

Glenn Haussman, Hotel Interactive's Editor In Chief, has been specializing in the hospitality industry for more than 10 years. He often speaks at lodging industry events, is quoted frequently as an expert source by newspapers and is an adjunct professor at New York University.