The effect of the Las Vegas Strip on hotel prices: A hedonic approach

The authors investigate the effect of location on the nightly hotel room rates charged in Las Vegas. Using a hedonic estimation approach, the authors control for room amenities and hotel and time characteristics. Including 6087 hotel room nights for hotels located near the Las Vegas Strip in two different years (2012 and 2017), the authors estimate the relationship between hotel location and nightly room rates. Consistent with prior investigations, the authors find strong evidence for the effect of location, amenities, and day of week on hotel prices, with a “Strip premium” of 40.21% (US$106.85 at the mean hotel price) for hotels located within 0.25 miles of the Las Vegas Strip compared to hotels beyond 0.75 miles of the Strip. They estimate a Center-of-Strip premium of 70.23% (US$186.61 at the mean hotel price) for hotels located within 0.75 miles, 36.89% (US$98.01) for the next 0.75 miles, and 18.89% (US$50.18) for the next 0.75 miles, compared to hotels beyond 2.25 miles.