Whether it is the snow of Lake Tahoe or the slots of Las Vegas,
people have been coming to Nevada in record numbers for decades – up
until 2009 that is. The economic recession has hit the Silver State
with a vengeance. Hotel occupancy rates in Northern and Southern Nevada
are seeing double-digit declines. The crown jewel, the convention
industry, has also taken a big hit. Both major cities are pulling out
all the stops in a bid to lure travelers back.
“The national economy is putting pressure on nearly every
industry, and travel and tourism are impacted more than many other
industries when consumer confidence is low,” said Jeremy Handel, public
relations manager for the Las Vegas Convention and Visitors Authority
(LVCVA). “We expect 2009 will be softer than past years, but we are
confident in the long-term strength of the Las Vegas brand. We will
come out of this as strong as ever.”
Conventions – An Uphill Battle
The consequences of the national confidence crisis have
manifested most poignantly in the state’s hotel occupancy rates. Both
Reno and Las Vegas are down 20 percent, which puts Las Vegas at 70
percent and Reno at 64.5 percent occupancy this spring. To combat these
numbers, three-star hotels in Las Vegas are offering double-digit room
rates, even though the LVCVA says March is one of the city’s busiest
months for conventions.
“March is among the three busiest months for meetings and
conventions, along with April and October. Las Vegas typically hosts
anywhere from 2,300 to 2,700 events in March,” said Handel. “The trade
show season actually gets its start in January with the International
Consumer Electronics Show and really picks up steam in the spring.”
Between April and June, Las Vegas will draw some 400,000 people
for conventions. Most of those visitors come for three events; between
March and July, the US Bowling Congress Championships & National
Convention will bring 150,000 people to Cashman Center in Downtown Las
Vegas, the National Association of Broadcasters will bring 98,000
people to the Las Vegas Convention Center in April, and a few weeks
later in May, the World Hardware Show will welcome 50,000 people to
that same space.
March typically brings tens of thousands of college basketball
fans to Southern Nevada. The West Coast Conference Championships was
played at the Orleans Arena in early March, followed by the Mountain
West Conference Championships at UNLV’s Thomas & Mack Center one
week later.
“Las Vegas has hosted the Mountain West Conference tournament for
two years under the current contract, and the event attracted nearly
9,400 attendees in 2007 and more than 8,500 in 2008, accounting for
over $4.5 million in non-gaming economic impact each year,” said Vince
Alberta, vice president of public affairs, LVCVA. “The West Coast
Conference tournament was held here for the first time in 2009, and we
have not had a chance to finish compiling statistics. Overall, the
feedback from conference officials, the teams and the fans has been
very positive,” he continued.
After those two championships wrapped up, the money rolled in.
Three weekends of NCAA Men’s Basketball Tournament games brought in
more than $60 million to Nevada sports books, second only to the Super
Bowl.
Basketball fan Allan Roose has been coming to Las Vegas for 25
years to watch the March Madness games. He lives in Dayton, Ohio which
hosted eight teams in the first round.
“I used to come with a buddy of mine, but now my wife comes with
me,” Roose said. “I come down here [to the Las Vegas Hilton sports
book] at 6 a.m. to get my seats for the day, and then I place my bets
when the windows open at 7. It’s tradition.”
National Spin Hurts Nevada
But in the first quarter of 2009, Las Vegas’ number one
industry was hurting badly. Between December and February, 340
companies cancelled their plans to meet in Las Vegas. The LVCVA stated
that loss equals $132 million in money not spent at local restaurants,
shops and businesses.
“While there have been cancellations, and that has received most
of the media attention, the overwhelming response we’ve heard from our
customers is that they are excited about holding their event here,”
said Cathy Tull, LVCVA’s senior vice president of marketing. “We’re
getting a lot of support from our client base, and many have even
helped us in providing testimonials and conducting media interviews to
support the industry and Las Vegas.”
In early February, Wells Fargo cancelled its 12-day corporate
trip to Las Vegas after coming under fire for accepting $25 billion in
federal money after losing $2.3 billion in the last quarter of 2008.
The previous all-expense-paid trips to Las Vegas included helicopter
rides, wine tastings and a private Jimmy Buffett concert. A week after
Wells Fargo’s backlash, investment firm Goldman Sachs moved its 3-day
trip from Las Vegas to San Francisco. Goldman Sachs also received $10
billion in federal bailout money, and had to pay $600,000 to the
Mandalay Bay Resort to cancel its reservation.
To add insult to injury, one week later, Nevada tourism was
criticized again, this time on the presidential stage. While promoting
his stimulus bill at an Indiana town hall meeting, President Obama
criticized companies receiving federal bailout money saying, “You can’t
get corporate jets, you can’t go take a trip to Las Vegas or go down to
the Super Bowl on the taxpayer’s dime.”
Las Vegas Mayor Oscar Goodman heard about the remark at an LVCVA
event, and immediately demanded an apology from the president. Goodman
maintained, “Las Vegas is still the number one business and tourist
destination in the world.”
Goodman says he made multiple attempts to contact the White House
even going to Washington, D.C. to fight the perception that Las Vegas
is not a good place for business gatherings. A few weeks later, White
House press secretary Robert Gibbs addressed the president’s remarks,
“The president believes it’s important to have a strong tourism
industry and it’s important that, as the president said earlier…that we
shouldn’t retrench. He would encourage people to travel.”
But the damage was done. Nevada tourism officials said the
president’s words discouraged companies from traveling here for fear of
being perceived as wasteful. The LVCVA’s marketing partner, R&R
Partners, immediately began a campaign to lure businesses back to Las
Vegas. They ran a full-page ad in The Wall Street Journal asking
companies to come back to Las Vegas for meetings. They’ve also begun
advertising in consumer business publications and convention trade
publications.
“Our sales staff has been on the road, meeting face-to-face with
current and potential clients to promote travel to Las Vegas and to
gauge the sentiment of the business community with regard to meetings
and specifically meetings in Las Vegas,” Tull said.
“These are the major marketing efforts that have worked best in
the past,” said UNLV Business and Economics professor, Dr. Keith
Schwer. “But, there is a real difficulty in altering the branding
effort of ‘What Happens Here Stays Here,’ to something that implies Las
Vegas is not just a place for frivolity.”
Pain Felt Statewide
In 2008, the Reno-Tahoe area welcomed 4.6 million visitors, but
they’re expecting much less this year. The Reno-Sparks Convention &
Visitors Authority has already seen a drop in conventions and trade
shows as well. There were only a handful of events booked in April, May
and June including: the Alpaca Western Extravaganza, the International
Science & Engineering Fair and the Green Variety Expo.
Reno will also host its own athletic championships with the US
Bowling Congress Women’s Championships going on through July, and it
will host two Northern California Volleyball Association events this
summer.
Even with major events in both cities, Nevada tourism could
continue to suffer because of state budget issues. Thanks to new
legislation, the room tax in Washoe County will increase 1 to 13
percent on July 1, 2009, and from 9 to 12 percent in Clark County. Part
of that money will go to funding public education, and 3/8 of every
percent of that tax goes to the Nevada Commission on Tourism (NCOT) to
fund its work. NCOT says for every dollar spent on advertising Nevada
as a destination generates a return on investment of $20 in state and
local tax revenue. But pending legislation could affect NCOT’s
marketing budget.
“Reductions could have a negative impact on the state’s ability
to promote and reach markets via media and other resources funded from
the NCOT,” said Ellie Oppenheim, director of the Reno-Sparks Convention
& Visitors Authority (RSCVA).
Even though the summer months are usually big moneymakers for
Northern Nevada tourism, Oppenheim says it is going to be much slower
this year. She says travelers nationwide have shown they are staying
closer to home and taking shorter trips. With that insight, the RSCVA
is focusing on short-term, consumer-oriented marketing efforts directed
at the drive market, the I-80 corridor and Bay Area, plus select West
Coast fly-markets with strong air service.
To make matters worse, the RSCVA predicts a 20 percent decline
in room tax for the current fiscal year from last year. Like most every
business today, the authority is looking at their budget to see where
to make cuts in order to withstand the next 18 months of uncertain room
tax collections in Washoe County.
But even with the economic downturn, Oppenheim says there’s a
light at the end of the tunnel. “The destination [Northern Nevada] has
the advantage of completed expansions and renovations at both the
Peppermill and Atlantis hotels. The new $50 million AAA SK Baseball
stadium in Downtown Reno opened in April and will be followed shortly
by the new Whitewater Park in Sparks. All of this will put the
destination in a more competitive position once the economy rebounds.”
Adjusting To The Times
“We understand that the economy is challenging to everyone, so
we’re focusing on providing people with a reason to take a break from
the every day issues they are facing,” Tull said. “Our strategy has
transitioned from a branding message to a retail-focused message during
the recession. Research indicates people are not comfortable in the
commitment of a traditional, extended vacation, but people still want
to get away. There is tremendous value to be found in Las Vegas right
now, and we’re continuing to evolve and add new attractions and
amenities.”
Despite the odds, some are willing to gamble on tourism and
gaming. The billion-dollar M Resort opened its doors on March 1st at
the very south end of the Las Vegas Strip. It was designed as an
economical alternative to the high-priced Strip resorts and casinos
with Chairman and CEO Anthony Marnell III saying no drink will cost
more than $10.
“This is the same protocol that I learned from my father at the
Rio,” Marnell said. “It’s straight forward. It’s the best product we
can put out at the best price and we can give it with great service.”
But Marnell is realistic. He says he does not expect to make
millions right off the bat. Weeks after it opened though, room rates
were still well above $200 a night, whereas the week of Steve Wynn’s
Encore resort opening in late December, guests paid only $150 a night
for a 1,000 square foot suite.
Dr. Keith Schwer says Nevada will rebound quicker than most
tourist destinations, but the state, the people and the businesses that
depend on tourism may have to weather a few more economic tussles
before the sun shines on the Strip and Lake Tahoe again. Las Vegas can
at least take comfort in knowing there are conventions booked through
2023.
