Vegas Hotel Rooms Growing; Flights Shrinking

(MoneyWatch)  I've been watching the situation in Vegas for some time, and it continues to get uglier by the minute. While some hotel construction projects have been halted, many more of them continue, adding thousands of rooms that need to be filled by someone. Meanwhile, the airlines have been slashing Vegas flights like there's no tomorrow, hurting the ability of travelers to get to all those rooms. Someone is going to be feeling the pain in Vegas very soon.

For once, the airlines are in a good position here. They can control how many flights they operate and the hotels are at their mercy. But with so many additional rooms coming online, the hoteliers are going to get more and more aggressive, giving better deals to tour package operators and doing anything they can to get people to town. If you live in a market within driving distance, like I do, hotel deals will only get better, but will the airlines ever come around?

Vegas has several airport expansion projects in the works that aren't necessary today but will be in the long run. The problem is that the airlines will have to pay for those projects in the form of increased fees, and that's going to discourage expansion even further.

There's no easy solution here. Airlines like Allegiant will continue to expand since they make a lot of their money off packaging hotels. You know that they'll just continue to see better and better rates. But the other airlines still won't find passengers willing to pay what's necessary to increase flights. People will pay more for hotels, but airlines can't get that premium. And that means Vegas has a big problem on its hands.