A bright spot in Nevada’s economy, the tourism industry, has grown over the past few years and is a driving force behind Nevada’s comeback. In fact, the industry has grown to the point that Elko outgrew its convention center and Las Vegas plans to expand its facility.
This hospitality/leisure sector accounted for 28.1 percent of the state’s total employment at the end of November, according to the University of Nevada, Las Vegas’ Center for Business and Economic Research (UNLV CBER). This number is between the most recent low of 26.3 percent in 2008 and a high of 31 percent in 1990.
“We’ve been growing quite nicely. We anticipate in our forecast that should continue [to grow] into 2016 and 2017,” said Dr. Stephen Miller, director, UNLV’s CBER, and professor of economics, UNLV. CBER conducts applied research vital to business and government and extends the benefits of UNLV’s research community statewide and nationally. In fact, CBER predicts a 2.5 percent growth in visitor volume overall in the Silver State this year.
Southern Nevada
In 2015, Las Vegas broke its record for its number of visitors, surpassing 42 million, said Rossi Ralenkotter, president/CEO, Las Vegas Convention and Visitors Authority (LVCVA), the destination marketing organization of Las Vegas. This is about a 2.5 percent growth over 2014’s volume, according to LVCVA statistics.
“We’re seeing recovery,” Miller said. At the end of November 2015, leisure/hospitality accounted for 31.6 percent of total employment in the Las Vegas Metropolitan Statistical Area, CBER data showed. This compares to the most recent high of 34.4 percent in 1990 and a low of 29.4 percent. For the same 11-month period, the hotel/motel occupancy rate was around 92 percent, which is “very high,” Miller added.
The convention industry had a solid 2015, Ralenkotter said, experiencing strong growth in the major conventions component and improved numbers in the corporate meetings segment.
A few reasons for the increased activity are an improving national economy, an influx of people from overseas and the destination understanding and delivering of customer service.
“There’s a great tourism infrastructure, a lot of great partners out there from roads to public safety that really come together and understand the value of tourism in Southern Nevada,” said Lori Nelson, director of corporate communications, Station Casinos LLC, a family-owned and operated entertainment, gaming and hospitality company. Stations also manages the sportsbooks for the El Cortez Hotel and Casino in Las Vegas and Baldini’s Sports Casino in Sparks.
Gaming properties have shifted their focus toward non-gaming offerings to fulfill the desires of today’s visitors. Among its 19 Southern Nevada properties, Station Casinos LLC, for example, features an array of recreation and entertainment options for guests, such as movie theaters, bowling alleys, ice skating rinks and supervised day care facilities, Nelson said.
This year, the corporation plans to add new restaurants to three properties: Santa Fe Station, Red Rock Resort and Green Valley Ranch Resort. It will debut the newly renovated spa at Red Rock Resort and upgrade the visual technology at Green Valley Ranch’s sportsbook. Station Casinos is celebrating its 40th anniversary this year.
In the Works
To continue providing the best possible experience for current clients and to attract new conventions, the Las Vegas Convention Center District has begun a four-phase process of expanding its current facility and revamping its existing one, Ralenkotter said.
As part of phase one, the district purchased the Riviera hotel-casino for $182.5 million, and this year will implode it and prepare the plot for outdoor exhibits. LVCVA revenue streams provided capital for this phase.
Phase two, an estimated $1.4 billion that requires funding, involves construction of a 1.4 million-square-foot facility on the Riviera site that will include 600,000 square feet of exhibit space plus meeting rooms, public areas and support services. The target start date is 2017.
Phase three is complete renovation of the existing space. The final phase will be further development as needed in the future.
Phases two to four will take an estimated five to seven years to complete once begun.
The project is critical to Nevada because the convention piece of the tourism business is a major contributor to Nevada’s economy. For Southern Nevada, the industry contributes more than $7 billion and supports 54,000 local jobs and $2 billion in wages and salaries. One meeting of about 50,000 attendees alone generates about $70 million in economic activity.
“The expanded convention center will allow, not only our current clients, like CES, SEMA and the CONEXPO construction show, to grow and expand. It will also allow us to attract new shows to bring more convention business to the destination,” Ralenkotter explained.
Also underway is construction of the $375 million, 20,000-seat arena for live events, which is scheduled to open in spring.
“The arena is already filling up with new acts, including its inaugural show featuring Las Vegas’ own, The Killers and Wayne Newton,” Ralenkotter said.
In addition, a $4 billion, Chinese-themed resort is in development with an eye toward a 2018 completion.
“The unknown factor that could be a good player is Resorts World Las Vegas. If that does take off, that would be a huge impetus to the local economy,” Miller said.
This year, Las Vegas will host the final presidential debate on Oct. 19 at the Thomas & Mack Center. The new Lucky Dragon resort will open. Caesars Palace will celebrate its 50th anniversary. Outdoor venues, such as the Park, will continue to expand. New musical headliners will appear with resident shows featuring Jennifer Lopez, Garth Brooks, George Strait, Pitbull, Rascal Flatts and Billy Idol.
The LVCVA will continue to develop the brand around its “What Happens Here, Stays Here” campaign, including the #WHHSH, or “whoosh”, which is expected to help magnify its online and social media presence. The organization will also continue researching and testing other campaigns for specific events or seasons.
CBER projects a 2.5 percent growth in Southern Nevada’s visitor volume this year. “We’re anticipating that 2016 should be a pretty good year for leisure/hospitality barring some unknown event,” Miller said.
Elko
The major news from Elko is the completion of a $12 million convention center expansion in November. The new, nearly 30,000-square-foot Elko Conference Center, a stand-alone facility behind the existing building, is equipped with state-of-the-art technology and can be divided into numerous room combinations, allowing for great flexibility, said Don Newman, executive director, Elko Convention and Visitors Authority (ECVA). Its maximum capacity is 3,200 people, whereas the current convention center can only hold 800.
The need for the facility was so great that the ECVA, which operates the centers and markets the city as a convention and tourism destination, had been turning away business, about six to eight bookings a month, Newman said. Since November, the agency has filled more than 200 days for the new center.
“We’re pretty happy that we’ve been able to do that,” Newman added.
Of the total project cost, the ECVA put down $3M it had saved over the years and financed the rest via a private/public partnership with the James Megellas Foundation, a Phoenix, Arizona-based non-profit organization.
Along with convention business increasing, Elko’s special events continue to grow as well. New this year, the city will host The Great Race, a competitive antique, vintage and collector car endurance road rally on public highways.
Overall, the number of visitors to Elko has risen to where it needs additional lodging accommodations. Three new such projects are slated to come online this year, which would add 240 rooms total among Ledgestone Hotel, Gold Dust West and Hampton Inn & Suites.
Work Continues
With its $2.6 million budget, which has remained roughly the same for the last three years, the ECVA plans to continue promoting the new facility (“Two Great Centers, One Great Location” is its tagline), hoping to garner more business from Nevada associations. It will continue to piggyback the Nevada Commission on Tourism’s efforts to draw more people to the region with its own leisure guest tagline, “Experience The Unexpected.” International marketing to Brazil and India is one such effort.
“We continue to grow into the markets that we’re reaching out to,” Newman said.
The ECVA’s revenue from room taxes, the measure used to quantify tourism growth, increased 22 percent between fiscal years 2011 and 2013, which is a dramatic jump considering visitor volumes in Las Vegas and Reno grew between 2 and 3 percent during that time. Elko didn’t experience the recession like most of the state did due to a high gold price and mining boom. In the ensuing years to date, Elko’s room tax revenue dropped a total of 13 percent, but still remains up about 9 percent overall for that four and a half-year period.
With Newmont Mining Corp.’s Long Canyon project outside of Wells moving forward, business levels in Elko should increase, Newman said. Overall, Elko tourism should experience about 12 to 15 percent growth this year.
Northern Nevada
Tourism in the North continues to rebound. The leisure/hospitality sector, the region’s top employer, comprises about 18 percent of the workforce, according to the University of Nevada, Reno’s Center for Regional Studies (CRS) an economic and demographic research collaborative that provides analytical and mapping services.
“[Tourism] is doing pretty well. It’s coming out of the slumps,” said Brian Bonnenfant, project manager, CRS.
Reno-Sparks visitor volumes reflect growth. In fiscal year 2014-2015, the total was 4.6 million, and the estimate for fiscal 2015-2016 is 4.7 million, CRS data showed. Almost halfway through this fiscal year, it was 4.4 million. In contrast, the pre-recession peak was 5.1 million.
“We’re not too terribly far behind. We feel confident that we can gain some ground this year,” said Jennifer Cunningham, interim managing director, Reno-Sparks Convention and Visitors Authority (RSCVA). The RSCVA is a marketing organization for the county to promote convention and tourism business and owner/operator of several facilities designed to draw out-of-town visitors.
Similarly, the average daily rate in hotel properties is also on the rise. During the first five months of fiscal 2015-2016, the rate increased about 9 percent, which compares to a total 2 percent bump upward in all of fiscal 2014-2015.
One trend is the growth in popularity of the non-gaming lodging properties, such as the Whitney Peak Hotel. Occupied rooms at those facilities grew 67 percent between July and November whereas those at downtown Reno’s gaming properties decreased 10 percent.
Convention business, which accounts for about 23 percent of visitors, also is doing well. In fiscal year 2014-2015, it jumped up 44 percent over the previous year. Already for this year, the RSCVA has some major conventions on the calendar, including the U.S. Bowling Congress Open Championships. A significant new one, slated for March, is the Big Sky Basketball Championships, which is booked for the next three years.
Factors contributing to this healthier tourism sector include an improving economy and increased awareness from newly added air service to and from Reno. In June, Southwest will begin Reno flights to and from Oakland. Efforts by the Economic Development of Western Nevada (EDAWN) continue to stimulate business, thereby enhancing visitor counts. The RSCVA’s partnership with EDAWN, UNR, the City of Reno and the Regional Transportation Commission (RTC) to market the region nationally has been successful. For example, it led to The Wall Street Journal article in October titled “Reno Sees Future, and It Isn’t Casinos.” Lately, the snow levels have drawn many tourists and will help summer offerings, including rafting, kayaking, boating and water sports.
Other offerings, including the spas at the local resorts, the burgeoning Midtown area, the craft breweries and the arts community, are additional strong draws. For instance, tens of thousands of people visited The Biggest Little City in the past five months to see the “Tahoe: A Visual History” exhibit at the Nevada Museum of Art. Special events are popular, too. They contribute about $375 million to the local economy per year, Bonnenfant said.
Current Efforts
In Reno, the Grand Sierra Resort and Casino spent $10 million renovating its Grand Theatre, and conversion of the Siena Hotel Spa Casino to a non-gaming Renaissance Hotel is underway. In Sparks, the plans to continue upgrades this spring with an overhaul of its west tower and 100,000 square feet of meeting space. Additionally, major redevelopment—new residential, dining and retail offerings—continues in Victorian Square in Sparks.
“All of these are good messages for tourists to see that Reno-Sparks is on the rise and doing new things,” Cunningham said.
The RSCVA’s budget for fiscal 2015-2016 is $39.6 million, which includes about $4 million from the new $2-per-night room surcharge that went into effect July 1. The previous year, its total budget was $33.6 million, and in pre-recession 2007-2008, it was $39.5 million.
“We’re gaining ground. We’re getting there,” Cunningham said.
The agency is in the process of hiring a marketing firm to help it determine the best new markets to target and the ideal media for doing so. It hopes to have that company on board by mid-March, at which time it will begin new campaigns. Funds for that marketing will come from the RSCVA’s portion of the room surcharge. The remainder likely will go to capital expenditures. A strategic plan for RSCVA and its several lines of business is also underway.
“We want to have the right data so we can do a thorough analysis and make some very strong, definite decisions on a direction for this organization,” Cunningham added.
In fiscal year 2015-2016, Northern Nevada tourism is expected to increase about 9 percent, Bonnenfant said, and visitor volumes likely will reach pre-recession numbers. The continuation of lower gas prices and people wanting to avoid other parts of the world for vacation should help the sector in the near term.
“You’re definitely going to float all boats with more disposable income coming to the area,” he added.
The recent growth of the tourism industry in Nevada is a welcome relief after the slump of the recession. As the economy continues to recover and improvements to facilities, infrastructure and solid marketing efforts come together, Nevadans are optimistic about tourism in the Silver State going into 2016.
