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I have stayed at both. Imperial Palace about 5 years ago, and Luxor 3 times b/n 2002-2005.
IP rooms are like a 1980's Holiday Inn. Not a bad place to lay your head or pass out, but not quite up to Vegas standards. Casino floor is fun and usually busy, but you are going to be dealing with a lower income group. Location is great if you want to spend time at Caesars, Venetian, Mirage, or other mid-strip major hotels. It is also a part of the Harrah's group if you want to get rated for your gambling, which provides plenty of gambling venues to visit on the strip.
Luxor is much nicer, but probably on the mid end of Vegas hotels. It probably compares favorably to NY,NY, MGM, Ballys, etc. I have never stayed at Bellagio, Venetian, Mandalay, or Wynn to compare high end. The gaming floor will have a good mix of income patrons, but you won't see the cut off jean shorts and sleeveless shirts. The table minimums are also raised on the busier nights. The pool is nice and I highly suggest spending an extra $150 for a cabana if the weather permits(December: prob. not). Location blows unless you don't mind renting a car, cab rides, or walking. If you do book a room there, request a room in the Pyramid on your first trip. Totally worth it for the easy access to the gaming floor, indoor balcony view, slanted walls, and inclinator(diagonal elevator).
For $18 I would chose the Luxor and play pokah's at MGM, Mandalay.
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