Seeing the Glass as Half Full

Beverage sales one of few things at Strip properties to show improvement

Now for a bit of good economic news: According to the Nevada Gaming Control Board, beverage sales (not including comped drinks) at the major Strip casinos totaled $536 million in 2009, which was a 5 percent increase from the previous year. That small percentage is significant, because the other revenue indicators the board tracks—gaming, rooms and food—showed marked decreases of between 10 and 19 percent.

“It was out of the norm that we saw these huge drops in gaming revenue, huge drops in room revenue, but the beverage revenue kind of held its own,” says Frank Streshley, chief of the state’s Tax and License Division.

Casino properties that gross more than $1 million in gaming revenue (some 260 of 340 properties in Nevada) have to report their revenue to the state each year. The report is unaudited, but Streshley says, “We assume it’s pretty accurate. It’s a tool we provide for the industry, investors, legislators, analysts.”

The casinos don’t report how beverage sales break down—how many of those drinks are soft drinks and how many contain alcohol. And no one knows for sure why beverage sales have held up. Are we merely drowning away our sorrows?

Streshley speculates alcohol continues to sell because it’s a “lower-ticket item.” It’s one thing, he says, “to be paying $100 to $400 for a room or eating a $100 steak dinner versus buying a

$5 drink.”

Mixologist Tony Abou-Ganim, a consultant who runs, watches what people are drinking; these days slick cocktails are the buzz instead of beer. Visitors to town may have only two cocktails instead of four beers, but if each cocktail costs $13 and the beer is $4, they’re still spending more money.

“People drink in good times, they drink more in bad times,” he says.

“I don’t have money to go to Bouchon but I do have money for a cocktail. It’s a gorgeous looking cocktail, why not? People are more selective with their disposable income, they still want to have a good time.”

Abou-Ganim says the Strip’s evolving cocktail culture may also be contributing to the slight rise. When he began drawing up drink menus at Bellagio in 1998, specialty cocktail menus were rare. Now he says it’s “virtually impossible” to go anywhere and not see one.

“Maybe they’re not buying a big bottle of wine but they’re having that second Plymouth martini,” he says. “The bar is an escape.”

The trend may be limited to the big casinos, however. According to Nevada Restaurant Association President Katherine Jacobi, NRA members haven’t seen any increase in beverage sales in recent months, and only a “very slight” increase in overall sales.

“The beverage industry has been pretty resilient when compared to others,” says Patricia Richards, mixologist at Wynn Las Vegas and Encore. She says the resorts have noticed a slight increase in beverage sales, and that she and her colleagues are busier than ever. “Libations are always going to be a strong part of our economy,” she says.

Still, though, while the alcohol industry in Las Vegas may be thriving, the same no longer can be said of gaming revenue. As Streshley notes, the state has been collecting data on casino revenue since the 1960s. There have been only two years when the casino industry has reported a net loss on its income statements—2002, when the loss was $300 million, and last year, when the loss was $6.8 billion.

Indeed, it’s bad enough to make a person want to drink.

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