Bereaving Las Vegas: Hard Times in the City of Sin

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For years, such meetings helped sustain the city. And that was the case until a new president came on the scene and -- in a single sentence -- declared Las Vegas the country's most dangerous spot for companies. "You can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayers' dime," President Barack Obama said at a televised town hall meeting in February. A short time earlier, details had emerged about how Wells Fargo, a major US bank, had booked a 12-day company event in the city -- after having been saved from bankruptcy with billions in government bailout funds.

In the end, Wells Fargo canceled the event -- and many other organizations followed suit. "They are trying to make it out that Las Vegas has become this toxic city you can't even go to," complains Phil Cooper, a leading event manager. In the first quarter of 2009 alone, more than 400 conferences and trade fairs were cancelled.

"I certainly was not happy about it. What it did is put the imprimatur on Las Vegas being a place of excess," says Las Vegas Mayor Oscar Goodman, a lawyer who became a celebrity while defending the city's most notorious gangsters. In fact, Goodman plays himself in "Casino," Martin Scorsese's 1995 Oscar-nominated film about the Las Vegas underworld. But this hasn't stopped city residents from electing him to three terms as mayor.

Can today's Vegas even be compared with the city in its wild years, when it was dominated by the Mafia rather than Wall Street? The big corporations have made it more impersonal, says Goodman, as he glances at the hundreds of photos on his office wall that show him with famous people, such as Bill Clinton and Michael Jackson.

"I liked life in the old days better," says Goodman. "I'd like to be able to shake a person's hand and have a deal rather than have a contract in writing. I think with the shakeout we are having now, many of those corporate properties will go into private hands and that will be more like the old Las Vegas."

If you're looking for the old Las Vegas, it can still be found north of "the Strip," in neighborhoods beyond the sparkle of the casinos. These are the neighborhoods where run-down wedding chapels advertise their services by claiming that Elvis Presley got married there once, and where the gamblers seem as seedy as the decades-old small gambling houses, where old people with pale faces and empty-looking eyes spend hours in front of slot machines that cost only two cents a game.

But the new, modern Vegas demands a different clientele. It needs companies and businesspeople, the kind who burn through their expense accounts and spend a few days having fun on the company's dime.

Desperate Times

Since this spring, the city has invested millions in an advertising campaign that also focuses directly on businesses. For example, according to a 10-page ad the city placed in the Wall Street Journal, "Business meetings in Las Vegas offer the best value proposition on the planet." It sounds a little desperate.

And no wonder: With each empty room, more and more jobs in Las Vegas are threatened. The rule of thumb is that each hotel room equals two and a half jobs. Tens of thousands of jobs have already been lost.

Las Vegas is now surrounded by empty developments with names like Azure Canyon and abandoned bedroom communities in the "Mediterranean style." Richard Plaster, one of the city's top developers, says that 30,000 houses -- or the equivalent of a new small city -- were built every 12 months. Parts of Las Vegas are only five or six years old.

The houses were all built along roughly the same lines: five rooms, three baths and two garages. There is plenty of space around Las Vegas. Most are now dark and empty -- either because they were never lived in or were quickly abandoned. Every month, there are foreclosures on an average of 2,000 buildings.

It's eerily quiet on the freshly paved streets. They have names like "Evening Melody" and "Dancing Breeze," names meant to evoke a pleasant life in a place where it never gets cold. Here and there, empty or half-developed properties form voids in the endless rows of houses, like gaps in a row of teeth. Plaster is convinced that "there are long, hard times ahead."

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• Part 1: Hard Times in the City of Sin
• Part 2: Migrating Money
• Part 3: Deutsche Bank to the Rescue?
• Part 4: Mafia Vegas vs. Vegas Inc.