Thursday, April 16, 1998 | 11:32 a.m.
Faced with a drop in air traffic while $7 billion in new megaresorts are under construction, airline and hotel executives are being urged to work more closely in promoting the city's lifeblood tourism industry.
Key figures in the aviation and resort industries met Thursday with Sen. Richard Bryan and were urged to "get on the same page" in helping to fill 26,000 new hotel rooms generated by this city's unprecedented building boom.
Bryan, a member of the Senate Commerce Committee, challenged resort executives to "make a compelling case that increasing service to Las Vegas is a wise business decision for the airlines."
Air traffic into McCarran International Airport is off 4.1 percent so far this year, equating to 317,271 fewer passengers.
Bryan, D-Nev., called Las Vegas "the best tourist product in the world." But he said the resort industry should not assume the airlines will provide the needed boost in traffic - an additional 7,700 passengers a day to fill 6,000 hotel rooms that have opened the past year and 20,000 scheduled to open in the next two years.
With the economy booming, airlines are opting to concentrate on the business traveler, rather than the leisure market, Bryan said.
"Yields to leisure markets such as Las Vegas and Orlando are lower than to business markets," the senator said. "Las Vegas, with a yield of less than 10 cents per passenger mile, competes for service with cities like Minneapolis, Dallas, Washington, D.C., Philadelphia, Chicago and Atlanta, which all have yields approaching 20 cents per passenger mile."
Charles Hunnicutt, assistant secretary for aviation and international affairs for the U.S. Transportation Department, said scheduled passenger traffic into Las Vegas increased less than 1 percent last year, as did the number of scheduled available seats. Nationwide, the traffic growth was 4.6 percent and the capacity growth was 3 percent. The slowdown in airline traffic growth came at a time when the inventory of Las Vegas hotel rooms increased 11 percent, he said.
Hector Mon, president of the Nevada division of Harrah's Hotels and president of the Nevada Resort Association, said consumer demand remains high for the product offered by Las Vegas.
"There's a lot more demand out there than is being met," Mon said. He said Harrah's has 16 properties outside of Las Vegas and surveys show "our customers love to come to Las Vegas."
C.A. Howlett, vice president of public affairs for America West Airlines, the city's second-largest carrier, disagreed on the demand. He said the Phoenix-based airline has 78 flights daily into Las Vegas with 11,000 seats, and those flights operate at 70 percent of capacity.
"We have 3,300 empty seats daily" into Las Vegas, Howlett said.
"I can tell you the seats are available," Howlett said. "We, too, want to see more people flying to Las Vegas. America West considers Las Vegas a critical component of our future."
Hunnicutt said the open skies agreement, which lifts barriers for foreign flights into the United States, has been signed with 29 countries. The agreement provides "unlimited opportunities for the airlines of those countries to now serve Las Vegas," the DOT official said.
Bob Benner, representing Northwest Airlines, said an agreement reached this week will provide nonstop service between Tokyo and Las Vegas starting in June, and will serve as "a gateway to the rest of Asia."
Hunnicutt said the United States has had little luck in breaking into the British market, calling that country's regulatory system "the most restrictive and antiquated" in the world.
Glenn Schaeffer, president of Circus Circus Enterprises, Inc., said his company will have 19,000 rooms in Las Vegas with the opening of the Mandalay Bay resort next spring. That gives Circus Circus about the same number of rooms that Disney has in Orlando, Schaeffer said.
The $7 billion investment in new megaresorts here the next two years will equal the amount invested in all previous properties in the city's history, Schaeffer said.
Terry Lanni, chief executive officer of MGM Grand Inc., said the costly megaresorts were changing the economic landscape of the city.
There was a time, he said when the casino was the engine that drove the vehicle "and everything else was free. It was cheap to get here and cheap when you got here."
"That was true when a property cost $10 million," Lanni said.
MGM has $2 billion invested in the MGM Grand and its half-share of the neighboring New York-New York Hotel-Casino.
"I don't see anything on the Las Vegas horizon to say it's lost its luster," said Dave Ridley, vice president of marketing and sales for Southwest Airlines. Southwest is the city's leading airline, with 140 flights daily.
Barry Shier, chief executive officer of the Golden Nugget Hotel, said the city began promoting itself as a family destination in the mid 1990s, then "failed to deliver on the promise."
"We've got to get on the same page," he said of marketing efforts.
The two sides agreed to explore ways to increase charter business, generate more traffic on slow Tuesdays and Wednesdays, beef up marketing and work for more international traffic, which currently accounts for 20 percent of the city's visitors.
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