How Las Vegas' tourism could survive an economic crisis?

Abstract

During the global recession of 2008, the demand for international tourism decreased. However, even during the recession, some tourism destinations benefitted from stabilized or even increasing international tourism demands. This paper analyzes factors which contribute to the growing international tourism demand in a destination. The empirical results identified three factors that helped Las Vegas survive the recession with the growing international demand: (1) the combined effect of the greater income elasticity of the visitors from Asia and Oceania due to fast income growth in the region, (2) Las Vegas' tourism product diversification through its high adaptive capacity which intensified its unique attractiveness and resulted in inelastic demand response to tourism price change, (3) “word-of-mouth” effect from the international visitors with a higher satisfaction level from diversified tourism products. Above all, diversification of tourism products and visitor origins was key to distribute the risk during an economic crisis with growing uncertainty and to stimulate a faster recovery thanks to the within-sector diversification in the tourism industry. Las Vegas' successful recovery was possible due to its adaptive capability in complex adaptive system (CAS). Highly specialized service-oriented regional economies can enhance regional resilience by improving adaptive capacity towards within-sector related variety.