(previously posted under Keith McCullough: 06/08/08 10:12 AM EST)
Main Street vs. Wall Street: Whales vs. Minnows
I ate a $38 steak (the cheapest on the menu) at Sleek Restaurant at Lumiere Place in the city of St. Louis, of all places. As I looked at the suits and fashionable dress shirts in the restaurant and the t-shirts, baseball caps, and blue hair in the casino, I was struck by the contrast.
The obvious disconnect between the quality of this new US Gaming facility and the quality of the customers got me thinking about the Main Street vs. Wall Street dynamic in our current economy.
More important to the US Gaming investor than St. Louis is the gaming Mecca of Las Vegas. It's been at least 10 years since Las Vegas has been considered anything approaching cheap . Prior to the cheap money leverage boom of capacity builds, Vegas was always resilient because you could spend $3.99 for the buffet, $80 for a nice room, and drink for free.
Sure you lost a bunch in the casino, but that never factored into the decision to go to Vegas because it's so cheap . Even as the operators jacked up hotel rates, food & beverage pricing, and table minimums, the consumers were perfectly willing to lever up their balance sheets to spend, spend, spend. Why not? The value of their houses were probably going up 20% a year forever right?
The new new Vegas was built for Whales, Dolphins posing as Whales, and Minnows posing as Dolphins.
Something's gotta give here. Vegas runs on a model of high hotel room occupancy. My bet is we'll see a resurgence of the food court and the buffet you don't need a credit card to pay for.