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Analysis of Las Vegas Strip casino hotel capacity an inventory model for optimization.pdf

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Analysis of Las Vegas Strip casino hotel capacity an inventory model for optimization

Tourism Management 24 (2003) 309–314 Analysis of Las Vegas Strip casino hotel capacity: an inventory model for optimization Zheng Gu* Department of Tourism and Convention Administration, College of Hotel Administration, University of Nevada, Las Vegas, 4505 Maryland Parkway, Las Vegas, NV 89154-6023, USA Received 11 April 2002; accepted 12 August 2002 Abstract Using aggregate operation statistics of Las Vegas Strip casino hotels, this study employs a single-period inventory model to estimate the optimal room capacity for Las Vegas Strip casino hotels from 2001 to 2004. The model predicts that the Strip will experience overcapacity from 2001 to 2003 but slight undercapacity for 2004. The ﬁndings suggest that to avoid undercapacity, new casino expansions may need to be planned for the year 2004 and beyond. r 2002 Elsevier Science Ltd. All rights reserved. Keywords: Las Vegas; Casino hotel; Optimal capacity; Inventory model 1. Introduction nights available almost doubled and casino revenue more than doubled, casino proﬁts were halved. As reported by Ryan (2001), in 2000, while Nevada The declining proﬁts of casinos on the Strip reﬂect casinos raked in more gaming wins, their proﬁts fell to the worsening market conditions of Las Vegas for the US lowest level in at least 16 years. A major reason for gaming industry since the mid-1990s. Gu (1997) Nevada’s declining casino proﬁts was the Las Vegas cautioned