Las Vegas

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ECON 230:
Urban Economics (G2)

Term Paper: Business Location Decisions & Patterns:
An Analysis of the Agglomeration Effects in Las Vegas

Table of Contents
Introduction3
Motivation3
Background and History3
Las Vegas Strip Today6
Location Quotient of Las Vegas7
Development Phases of Las Vegas8
The First Wave of Development9
Supply-side Factors9
Demand-side Factors10
The Second Wave of Development11
Demand-side Factors11
Supply-side Factors13
Summary of Development Phases14
Comparing Macau with Las Vegas15
Lessons Learnt For Singapore17
Conclusion18
Bibliography19

Introduction
Motivation
Over the years, Las Vegas has developed itself into a city housing mega-resorts and massive entertainment providers. More specifically, Las Vegas Strip, which is a 6.8 kilometer long highway leading from Los Angeles into Las Vegas, has seen a conglomeration effect with many large hotels, casinos and resort properties congregating there. Nineteen of the world’s twenty-five largest hotel by room count are on the Strip, with a total of over 67,000 rooms. In this paper, we are interested in studying the agglomeration trends of the mega-resorts in Las Vegas, understanding the reason and benefits of concentration. Next, we attempt to analyze difference between Las Vegas and Macau, the 2 gaming giants of the world. Lastly, we will extend these lessons learnt to two upcoming integrated resorts in Singapore. Background and History

A mega-resort (or known as an integrated resort locally) is a casino based vacation resort which normally houses its own hotels and other facilities. The first mega-resort appeared on the Strip in 1980s. However, prior to the appearance of mega-resorts, there were large casinos, hotels and other facilities residing along the strip. In total, there were evidently two construction booms along the strip that saw huge developments and contributed the Las Vegas Strip today. In 1904, the first railway was built in Las Vegas and this promoted the city to be a prime location for stop facility and township. From 1910s-1930s, gambling was illegal but underground gambling activities were prevalent. In 1931, the state of Nevada where Las Vegas resides was the first state to legalize casino gaming and held this monopoly for over 40 years. During the same year, the construction of the Hoover Dam started and the city saw an influx of construction workers causing the population in Las Vegas to grow from 5,000-24,000. In 1941, El Rancho Vegas, the first casino-hotel type of construction was built and the success of it triggered a construction boom in the late 1940s. This led to a construction of several other hotel casinos along the strip. From late 1940s to early 1960s, many of these casino-hotels were run by organized crimes. Even though it was common knowledge that these casinos had a dubious background, people flocked to the casinos. By 1954, over 8 million people visit LV yearly, pumping 200 million dollars in tourism revenue. From 1960s onwards, casinos started to become more of a legitimate business after the mobs were being run down by the government, as they passed the running of casinos to private companies. At that time, gaming was gradually no longer the only attraction as concerts featuring superstars like Elvis Presley and Frank Sinatra started to happen in Las Vegas. In 1959, the first convention centre was built by the government to fill hotel rooms with conventioneers during slack tourist months. The convention centre had an area of 90,000 square foot and can house 6,300 people. In 1990, the Las Vegas Convention and Visitors authority demolished the previous convention centre to make room for an expansion to a 1.6 million square foot facility of which 1.3 million was dedicated to convention space. This development was pivotal in shaping Las Vegas to be the convention centre of the world. By 1994, Las Vegas Strip developed itself into a world class...
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