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Official: Vegas To Take Hit From Economy

Airline Cutbacks, Rising Costs To Affect Forthcoming Profits, Tourism Group Says

POSTED: 9:22 am PDT June 24, 2008
UPDATED: 10:20 am PDT June 24, 2008

As fuel prices soar, the airline industry is cutting back on flights, raising prices and tacking on new fees. This hike is causing many tourists to stop traveling to Las Vegas, officials said.

On Monday, tourism and airline executives met to talk strategy about how to handle the rising-cost economy and keep tourism coming to the Valley.

"Fuel cost is up $18 billion," U.S. Airways President Scott Kirby said. "Last year was our first profit year in years. We earned $2 billion. So, an $18 billion increase in fuel price is just traumatic for the industry."

The airline is compensating for this loss by cutting a dozen flights into McCarran Airport. Kirby said that given the continual increases, many airlines may follow suit.

"It's necessary for the industry to break its product up," Kirby said. "That way we can offer the lowest possible fares to consumers."

Tourism officials said this trickle down from the "airline crisis" will hit Las Vegas hard in the next few months.

"We do think the next three to six months there will be some challenges for us as a community," said Terry Jicinsky, vice president of sales and marketing of the Las Vegas Visitors and Convention Authority.

According to their research, the biggest problem the Strip will face is filling the hotel rooms, officials said. More than 80 percent of hotel occupancy in Las Vegas comes from folks flying into town.

"We are out there worldwide marketing Las Vegas in countries in Asia, as well as Europe, Canada and Mexico," Jicinsky said. "That'll play a big part in the future success of Las Vegas."

The Nevada Tourism Alliance said there are more than 155,000 people to fill right now, and there will be an additional 30,000 added in the next few years, thanks to new projects. That means an additional 14,000 people will need to visit the city to keep up with the expanding amount of rooms.

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