01-21-2016, 02:48 AM
(This post was last modified: 01-21-2016, 02:51 AM by dmcowen674.)
1-20-2016
The new Las Vegas parking fee shows what happens when competition disappears
Free parking has been a signature feature of casino hotels on the Las Vegas Strip since (we'd guess) the days of Bugsy Siegel. Despite the gaming industry's relentless search for new sources of income, it's survived as an artifact of competition — no Strip property dared to start charging for parking for fear of losing customers to the casino next door.
You can kiss this tradition goodbye. MGM Resorts announced that it will be charging up to $10 to park at its premier Strip properties. It's a safe bet that other Strip casinos will fall into line soon.
This is not a minor event. "It could be an historic shift," David Schwartz, director of the Center for Gaming Research at UNLV, told the Las Vegas Review-Journal.
What happened? To put it simply, competition disappeared. MGM owns a dozen casino hotels on the Strip, clustered at the south end around Las Vegas Boulevard and Tropicana Avenue. Caesars Entertainment, the other mega-corporation on the Strip, owns nine, clustered around mid-Strip. Caesars has been coy about whether it will follow MGM on parking fees.
These assemblages are the result of a string of mergers: MGM acquired Mirage Resorts in 2000 and Mandalay Resort Group, which had evolved from Circus Circus Enterprises, in 2005. That year, Caesars merged with Harrah's Entertainment.
It's no secret that competition is what keeps prices low, and consolidation drives them up. For examples, one need look no further than the cable and airline industries. Cable operators nationwide typically have had monopoly franchises in their local communities, and mergers have given some big companies, such as Comcast, a larger footprint nationwide. The harvest has been an unrelenting rise in cable fees at more than four times the rate of inflation, as the Federal Communications Commission documented in 2014.
Meanwhile, a string of airline mergers has reduced the roster of nine major U.S. airlines to four (American, United, Delta and Southwest), choking off competition at dozens of airports around the country. According to a study by the Associated Press last year, 40 of the 100 largest U.S. airports are controlled by a single carrier.
As the number of airlines serving a city shrinks, fares typically rise. In Indianapolis, AP reported, domestic fares were 9% below the national average a decade ago, when the two largest airlines serving the community controlled 37% of the seats. After mergers, Southwest and Delta ended up with 56% of the seats, and fares are 6% above the national average.
The new Las Vegas parking fee shows what happens when competition disappears
Free parking has been a signature feature of casino hotels on the Las Vegas Strip since (we'd guess) the days of Bugsy Siegel. Despite the gaming industry's relentless search for new sources of income, it's survived as an artifact of competition — no Strip property dared to start charging for parking for fear of losing customers to the casino next door.
You can kiss this tradition goodbye. MGM Resorts announced that it will be charging up to $10 to park at its premier Strip properties. It's a safe bet that other Strip casinos will fall into line soon.
This is not a minor event. "It could be an historic shift," David Schwartz, director of the Center for Gaming Research at UNLV, told the Las Vegas Review-Journal.
What happened? To put it simply, competition disappeared. MGM owns a dozen casino hotels on the Strip, clustered at the south end around Las Vegas Boulevard and Tropicana Avenue. Caesars Entertainment, the other mega-corporation on the Strip, owns nine, clustered around mid-Strip. Caesars has been coy about whether it will follow MGM on parking fees.
These assemblages are the result of a string of mergers: MGM acquired Mirage Resorts in 2000 and Mandalay Resort Group, which had evolved from Circus Circus Enterprises, in 2005. That year, Caesars merged with Harrah's Entertainment.
It's no secret that competition is what keeps prices low, and consolidation drives them up. For examples, one need look no further than the cable and airline industries. Cable operators nationwide typically have had monopoly franchises in their local communities, and mergers have given some big companies, such as Comcast, a larger footprint nationwide. The harvest has been an unrelenting rise in cable fees at more than four times the rate of inflation, as the Federal Communications Commission documented in 2014.
Meanwhile, a string of airline mergers has reduced the roster of nine major U.S. airlines to four (American, United, Delta and Southwest), choking off competition at dozens of airports around the country. According to a study by the Associated Press last year, 40 of the 100 largest U.S. airports are controlled by a single carrier.
As the number of airlines serving a city shrinks, fares typically rise. In Indianapolis, AP reported, domestic fares were 9% below the national average a decade ago, when the two largest airlines serving the community controlled 37% of the seats. After mergers, Southwest and Delta ended up with 56% of the seats, and fares are 6% above the national average.