IS THERE A PAM ANDERSON BEHIND THOSE UGLY PASSENGER #S?

McCarran Airport reported that 424,000 fewer passengers flew in and out of Las Vegas in August versus last year. The 9.9% drop was worse than July’s 8.6% decline. However, I believe August gaming revenue (released in a few weeks) will look significantly better than the Al Franken look-alike 15% drop in July. August 2007 was a strange month. Despite a 6.4% increase in airport traffic, table drop actually declined 15% and drove total gaming revenue down 4%. Slot hold percentage was abnormally low as well. Thus, the comparison is easy from a revenue perspective but difficult from an airport traffic perspective.

For August 2008, my model projects total volume down only 3%, not good, but certainly not as bad as advertised in the McCarran data. Assuming normal hold %, I calculate total gaming revenue down only 1%. Please don’t mistake my analysis for bullishness. I’ve been consistently negative regarding the prospects of Las Vegas Strip. However, consistent with our focus on objectivity here at Research Edge, I must call them like I see them. And I see August turning out a little better than expected.

Due to a funky comparison, Aug Strip results are likely to look better than indicated by the airport data