There may well be a very high number of hotel rooms in the Vegas valley, but this isn't your Grandpa's Vegas. Since most of the casino resorts are now owned by publicly traded corporations, instead of being loss leaders for the gambling operations, everything has to pull it's weight. Vegas isn't cheap anymore.
I noticed over the past 20 years that LV isn't cheap any more. Those fabled buffets that were cheap and pretty decent are pricey now.
You can still find rooms on the Strip for not too much;
https://doubletree3.hilton.com/en/hotels/nevada/tropicana-las-vegas-a-doubletree-by-hilton-hotel-LASNTDT/index.html
Doubletree for $50 or so, watch for the added fees though.
Rates go up 5x for NYE.
I think you guys are right and wrong. Saying that "Vegas isn't cheap" is a bit of an exaggeration. You can still visit Vegas cheaper than you could visit most any other major destination. That said, it isn't anywhere near as cheap as it once was.
Back in the late '50's my dad was stationed at the Marine Base at Twentynine Palms, CA. Back then 19 year old grunts weren't paid very much (the US had a draft so they didn't have to have competitive pay). My dad and his buddies would usually go to Vegas if they were going anywhere because it was CHEAP. Back then, as
@GopherRock indicated, the food, hotels, etc were basically loss-leaders for gambling operations so a group of young marines could stay in a CHEAP room and have a weekend in Vegas.
I think several things have caused the change. For one,
@GopherRock is right, the casinos are now owned by publicly traded corporations. However, the mobsters that owned the casinos back in the 50's were obviously profit driven as well. I think the bigger change is the explosion in legal gambling alternatives. Gambling was not allowed in Atlantic City until the 1970's and the proliferation of Indian Reservation and Riverboat casinos didn't start until later than that. Years ago Vegas was nearly the only place in the Country where gambling was legal. Up until Castro took over (1959), Cuba used to have casinos in Havanna and those were a popular destination.
Between the time that Castro took over in Cuba and New Jersey allowed gambling in Atlantic City, Vegas pretty much had a corner on the market. Back then, I think that their bread-and-butter was a blue-collar middle to maybe upper-middle-class gambler who flew in once a year or every few years and gambled a few hundred or maybe a few thousand bucks. Those customers simply don't go to Vegas anymore. Now they go to their local legal casino.
The casinos in Vegas had to upgrade because they are serving a different clientele.