Nevada Business Journal recently hosted leaders from the Nevada travel and tourism field at a breakfast roundtable meeting at the Four Seasons Hotel in Las Vegas. Five CEOs from the private sector joined four public officials and Lt. Gov. Lorraine Hunt in a lively discussion of issues impacting the state’s largest industry. Hunt, who chairs the Nevada Commission on Tourism, served as moderator. Following are excerpts of some of the major points discussed, as attendees told how their businesses were impacted by the terrorist attacks of Sept. 11 and discussed their plans for the future.
The Industry Responds to Sept. 11 Events
Lt. Gov. Hunt: As soon as Sept. 11 hit, we realized that it affected the whole state, and our mission is to promote tourism all over Nevada, including the rurals. Immediately after Sept. 11, I called together a task force to discuss our response to the crisis in the travel and tourism industry. We discussed changing some of our marketing strategies, stressing the drive market and publicizing the fact that we’re still open for business. I like to think of Nevada as the USO of the nation in times of war and strife. The USO was where people went to party and have a good time and get their minds off their troubles for awhile. We also wanted to stress safety – it’s safe and it’s a great bargain.
Manny Cortez, Las Vegas Convention and Visitors Authority (LVCVA): Obviously, as the premier agency that markets Las Vegas, after Sept. 11, our plans were shattered. We were sailing along pretty well with our marketing strategies, but we had to re-think them, because the way we had done things in the past was no longer possible. Our biggest challenge has been to get the message out that Las Vegas is alive and well and that it’s okay to come here. The key ingredient in that was the timing. We didn’t want to get back into the marketplace too quickly and appear callous, but we also didn’t want to wait too long and get left behind. With our resort partners and our marketing and sales team, we were able to get back on the street at what we considered the right time, with a new message, which we tested in some of our regional markets. We found out that people didn’t want to hear what we thought they wanted to hear. They didn’t want to be reminded of the tragedy. They wanted to be told that Las Vegas is just fine, “Come here and nothing’s changed” – that we’re open. We want to get the message out that Las Vegas has always been considered one of the safest destinations in the world and will continue to be a safe destination.
Michael Reichartz, Travelscape/Expedia: For those of you who don’t know us, Travelscape is a wholly owned subsidiary of Expedia, which is now the largest seller of travel on the Internet. As for what Sept. 11 did to our business, it certainly changed our focus in terms of reacting to the needs of the consumer. In the hours and days afterwards, we actually took the booking engine off our site. It was much more important for consumers coming to our site to get relevant information – how to get home to loved ones, and how long would the trip take? We went dark and pulled a lot of our radio ads and marketing campaigns. But that did not mean in any way that we lost presence. Consumers can still find us. That’s the great thing about the Internet. Having the consumer brand allowed us to be out there and still have communications with the consumer. We as a company are cautiously optimistic. A number of components in our business have exceeded pre-Sept. 11 numbers.
Richard Fitzpatrick, Interactive Gaming Institute: As Michael [Reichartz] suggested, the effect of Sept. 11 on the Internet was initially to put things on hold, but now activity has actually increased. Christmas was a very solid time for Internet sales, so perhaps those people are staying home more and traveling less – more of the cocooning concept.
Bill Hoffman, Incline Village Crystal Bay Visitors & Convention Bureau: We got hammered pretty good by Sept. 11. The Hyatt Regency property, which is our largest meeting property, basically lost every corporate group for the remainder of the year. Consequently, we pulled back some of the marketing dollars we had committed to other areas and committed them to a drive market campaign. Fortunately, we have a close drive market in the San Francisco Bay area. The campaign has been very successful. The Bay area has responded very well. Our occupancy levels have been running a little bit ahead of where we were last year, but our average [room] rate is down so far that we’re still at the 90 percent level in revenue.
Paul Dykstra, GES Exposition Services: While GES is not directly involved in the travel and tourism business, we are certainly heavily dependent upon it. As a general contractor for the trade show industry, we work throughout North America, but we’re based in Las Vegas. We do business in the convention center and most of the hotels in town. Sept. 11 definitely had a big impact for us, and we found out how heavily tied we are to travel and tourism – people didn’t come to shows, exhibitors didn’t come to shows. It meant a lot less business for us.
Tony Santo, Bally’s/Paris/Flamingo Hotels: Obviously, since Sept. 11, we’ve seen a sharp decline in our business. It’s been very spiky. We’ve seen some good weeks and some bad weeks, some good weekends and some not-so-good weekends. We’ve been directing our marketing efforts to the regional market and also doing more direct marketing with our customers and interactive marketing. We tried to fill guest rooms and get people and foot traffic to our properties.
John Plunkett, Taxicab Authority: After retiring from the FBI, I took over the Taxicab Authority in July. During 33 years in law enforcement, I had never worried about the budget – the budget was always there and the paycheck was always there. Since Sept. 11, we are down about a million trips. Being a self-funded agency – we’re not a general fund agency – it translates to about a $150,000 loss in revenue to the Taxicab Authority.
Bruce Bommarito, Nevada Commission on Tourism: We’re increasing our trade show participation. We’re trying to get out the message that everybody is alive, well and open. Our rural areas on major highways actually increased business after Sept. 11 because of increased traffic on the highways. Places like Winnemucca are up 20 percent, so that was one small good result of it.
Cortez: We have taken some suggestions from the federal government since Sept. 11 and incorporated them into the Convention Center. For example, our receiving warehouse are now located across the street, separate from the meeting rooms. We are also taking a close look at all incoming freight.
Plunkett: Our staff of 58 people – about 38 of them peace officers – regulates 16 taxi companies and 4,600 drivers. After Sept. 11, we heard some complaints that taxi drivers of Middle Eastern descent were displaying photos of Osama bin Laden on their visors. We put a stop to that in a hurry. We developed a coordinated effort between local and federal authorities to make sure our passengers were safe and that they felt safe. It’s an ongoing process.
Facing Ongoing Challenges
Cortez: Our biggest challenge in my view is to provide the transportation to continue to bring people to Las Vegas. It’s one thing to entice them to come to Las Vegas, but it’s quite another to provide the transportation to get them here. With that in mind, we need to look at the roadway corridors. It’s important to remember that I-15 is more than just a tourism corridor. It’s a business corridor as well. All of our consumables have to be imported, so it’s critical for our survival. The LVCVA, the Las Vegas Chamber of Commerce and the Nevada Resort Association have taken the lead in raising money, both from the federal government and the state of California, to support the widening of I-15. Over the next four to six years, we’ll see more construction work on the highway. We also need to encourage the airlines to continue to increase the flights coming in to Las Vegas area and we should probably get back to discussions about the high-speed rail between here and Southern California, because our future lies in our ability to bring visitors in.
Bob Broadbent, Transit Systems Management : I sit on the Board of Directors of National Airlines, and it looks like it’s going to be successful in its reorganization. As part of that reorganization, it has a major expansion plan. If National raises the money it needs, it should successfully come out of bankruptcy, and that’s important to the economy. It used to be when one carrier dropped flights into Las Vegas, another one would step right in to take its place, but that’s not the case anymore. We have to look at people in the airline industry – Southwest, America West and National – they are the ones that have said they want to serve Las Vegas, and they are the ones we need to take care of and try to help.
Reichartz: I agree with Manny that the key to marketing Nevada as a destination is the infrastructure, keeping the airlines committed to servicing the destinations. We sell a ton of airline tickets and if there is a lack of supply, companies like ours will be forced to market other destinations.
Santo: One of the biggest challenges for [Las Vegas] is access – bringing people here. The city is growing, but I-15 has not grown. Its really been compounded since Sept. 11, because the air traffic has decreased and we’ve all looked toward the drive traffic. I-15 is really becoming a nightmare. With Indian gaming, if someone lives in Southern California and it takes them eight or nine hours to get to Las Vegas, they’ll probably end up going to an Indian reservation and gambling there, even if they’d rather come here.
Bommarito: Short-term trips may be affected by Indian gaming, but we’re taking measures to offset that. Reno may be more affected by Indian gaming than Southern Nevada because they have a lot of drive-in visitors from California. We are encouraging Reno to promote Northern Nevada as a destination, not just a place to gamble. They have been developing the river area and making it a very attractive place to visit.
Cortez: We asked focus groups about Indian gaming and found that Las Vegas is still the destination of choice, but convenience is also a factor. If it’s more convenient to go to the Indian casino nearby, they might make five trips each year to Las Vegas instead of seven, and go the other two times to the Indian casino. We have to develop incentives to make them want to come here.
Lt. Gov. Lorraine Hunt: International travelers don’t want to go to Indian casinos. They want the Nevada experience.
Santo: People want to escape here – they want an experience they can’t get close to home. I-15 is pivotal because of the convenience factor.
Fitzpatrick: On the Internet front, there’s a challenge just across the border in California, where they’ve legalized Internet betting for racetracks, so anyone in California can place a bet on the Internet on any horse race in the world. That will give people less of a reason to come over here, with the traffic being a problem.
What’s Ahead for Travel and Tourism
Bommarito: The Nevada Commission on Travel and Tourism has stayed the course and worked on our long-term plans, including our most significant development, the Adventure Travel campaign, which had been planned prior to Sept. 11. It’s had a huge positive impact. In the first five weeks after the rollout, we received 6,000 requests for our adventure guide. We have had a tremendous response from all the government agencies, and in all our rural areas people have just jumped on the bandwagon. Citizens in many areas of the state really feel like its their own program and that’s what’s been pushing it forward. That includes sponsorship of the Xterra USA Championship at Lake Tahoe, with mountain biking, swimming and a trail run. We want to keep it in Nevada and to identify ourselves with that type of image.
Plunkett: We depend on a strong [destination marketing] campaign from the Convention and Visitors Authority, and Mr. Cortez has done a very fine job. From a 22 percent deficit in the companies we regulate in September and October, it has gone up to about 9 percent. February was a very good month, and the owners seem to think we’re within 5 percent of where we should be from last year. This is a very good sign.
Fitzpatrick: Nevada properties have no choice at this time but to go to the Internet for gaming purposes outside the United States. MGM Mirage is already licensed [offshore]. There will probably be six to eight other Nevada casinos licensed offshore. Regardless of where the servers are, they will be reaching tens of millions of new people with a new ability to tell the Nevada story. Such an international market offers huge opportunities. We want to work with all the people who are developing Web sites, so they include links to the Convention Bureau and are able to sell Nevada while they have these new people visiting their sites. On the intra-net side of Nevada gaming, the [Nevada Gaming] Commission will be looking in the next couple months at new rules to allow such things as in-room betting. People can rent a hotel room for the Superbowl and place a bet in the room just as if they were in the sports book Simultaneous betting – who’s going to score next, who’s going to get the next penalty, all those sorts of bets. We have federal issues to deal with outside Nevada, but we are developing a number of things that will become attractive new reasons for people to come to Nevada.
Broadbent: Transit Systems Management has a contract with a non-profit corporation (Las Vegas Monorail Company) to build the Las Vegas monorail. On Sept. 20, 2000 we funded and put in the bank $650 million to build the system. We feel the Las Vegas Monorail, once it is built and operating, will become a Las Vegas icon. Tourists will talk about the monorail – so will the press and everybody else. We expect cars to be on the track in January of next year for about a year of testing. The testing track will be between the Sahara and the Las Vegas Convention Center, with a stop at the Las Vegas Hilton. We hope to carry well over 20 million people the first year. Next year we want to work closely with people who promote and sell convention packages so they can include monorail passes in their packages. We have serious interest from the properties on the south side of the Strip to get a monorail out there so it can serve the 1.8 million-square-foot Mandalay Bay convention center and the airport. We are also working with Bombardier. They have asked us to look at putting their high-speed train on a track and bringing it in from Los Angeles.The high-speed train would help bring more people in, but it doesn’t solve the basic problem of the airport. Clark County is about a year away from buying 6,500 acres of land to build the new airport in Ivanpah. We have the money to purchase it, after we clear all the environmental hurdles put on the project by Congress. We originally estimated McCarran [International Airport] would be out of runway space, which is the limiting factor, by 2010. Maybe because of last year’s slowdown, it’ll be 2011 now. But it takes five to 10 years to build a new airport, so we really need to get started now.
Hunt: I’ve made contacts during the last few months in the Asian market, trying to pique their interest. In the last six months I have been meeting with delegations from the People’s Republic of China. That’s a market that’s going to be huge for us. They like to gamble, they like to travel. There are a lot of young, entrepreneurial people who want to participate with us and learn from us. They approached me and invited me to go to China. We’ll be talking about travel and tourism, about how to promote the 2006 Olympics, and also about economic development. It looks like it will be a very powerful trip.I want to thank Connie [Brennan] and the Nevada Business Journal, for sponsoring this meeting and also for doing a wonderful job of covering the entire state. The days of the north, south and the rurals all competing against each other should be put aside. Our competition is not within our borders – it’s from outside our borders. We are working on diversifying our economy, but we also need to work together to ensure that Nevada is the global hub of tourism forever.
