Adelson blasts LVCVA, competitors, union

Gary Thompson

Wednesday, March 25, 1998 | 9:45 a.m.

Unlike Sheldon Adelson, a fine wine mellows with age.

On Tuesday, the cantankerous developer of the 3,000-room Venetian hotel-casino delivered one of the most confrontational speeches of his Las Vegas career, a blistering attack on competitors, unions and the Las Vegas Convention and Visitors Authority that left listeners who hadn't heard him before shaking their heads in amazement.

His keynote address kicking off the three-day International Gaming Business Exposition was more like an artillery barrage than the selective sniper fire that has characterized previous Adelson speeches.

The danger in such a delivery is that the message may get confused with the messenger and be all too often ignored. Cut through the fiery rhetoric, and you may find Adelson's ideas warrant, at the least, rational and reasoned debate.

Yet his pit-bull personality invites no discussion, makes those he's targeted more apoplectic than contemplative and leads most to angrily dismiss a strategy that just might reinvigorate stagnant Las Vegas visitor growth and redefine a flagging market.

What would be your first reaction if you were a Circus Circus Enterprises Inc. executive hearing Adelson's contemptuous remarks about your company?

"As the king of the 'Strip of Dreams' syndrome," Adelson sniffs, "they earned one cent a share last quarter and went on Standard & Poor's credit watch. Do you think their paradigm is in need of revision?"

Adelson on the Aladdin:

"...another 3,000-room standard Las Vegas hotel room product, another undifferentiated 'me too' property, believing, it appears, that they could milk off the same tour and travel udder, probably hoping it will run out only after they are finished."

Adelson on Mirage Resorts Inc.'s chief financial officer:

"As recently as yesterday, Dan Lee told two of our bond investors that we are running substantially over budget. Maybe he's just confusing us with the now legendary $400 million to $600 million -- and growing -- cost overruns at his own Bellagio as they panic over there trying to improve the Bellagio to compete with the Venetian, now that they've seen the superior offering of our model room and the quality of our development plans ... Well, since I'm the sole owner, I watch the budget like a hawk. I can assure you that we are on budget and on time."

Adelson on unions:

"Another misconception is that unions are unilaterally good for us ... that operating unions add value to Las Vegas. Well, I say they subtract value."

Adelson on the Las Vegas Convention and Visitors Authority:

"They are part of the problem and not the solution ... an ineffective bureaucracy ... that sponsors such useless events as lacrosse tournaments, putting contests and volleyball meets. The next you know, they'll be sponsoring tiddly-wink contests."

B.S. -- Before Sheldon -- such combative comments were normally limited to Nevada's political races, where competitors grew accustomed to rancorous debate and were quick to respond in kind. Casino and convention officials had tepid responses on Tuesday.

"How much money has Sheldon made in Las Vegas?" Circus Circus President Glenn Schaeffer asked. "The majority of the money made in the history of Las Vegas has been made by Circus and Mirage."

LVCVA boss Manny Cortez doesn't like "he said, she said stories," an aide said, and wouldn't have any comment. Mirage's Lee and Aladdin and Culinary Union officials couldn't be reached for comment.

Adelson's quotes should be considered in context, and not as ad hominem remarks. In some instances, they are a response to overt or covert attacks he's weathered himself -- or invited, depending on your opinion of him. As recently as this past weekend, he was the subject of derisive comments at a charity event he'd tried to derail because it honored a national labor leader.

But his style is probably all the targets will remember, as the long-running war of words between Adelson and his legion of Las Vegas detractors heats up. That's unfortunate, because the feud diverts attention from two major problems facing the Las Vegas tourism industry -- transportation bottlenecks and inadequate marketing -- and his suggestions for resolving them.

"Many critics have argued that Las Vegas is overbuilt, that the market is saturated, that airlines have decreased air transport, that overall traffic has decreased," he said. "However, these are all effects and, in my opinion, not the root causes of the problem."

"In the end, we cannot point our fingers at airports or the airlines or the highways and traffic, for they are only responding to the market," he said.

"We have not effectively targeted higher-end business travelers who are willing to pay more for every convenience. The blame lies solely with us."

Citing LVCVA figures showing a "piddling 2.6 percent" visitor volume growth rate over the past three years and a looming 20 percent increase in hotel rooms, Adelson said, "Simple arithmetic tells us that in the next three years we have to more than double our rate of average visitor growth to 6 percent just to stay even."

"Since the LVCVA spending is subsidized by the room tax and that amount of money flowing to the convention authority has increased dramatically over the past three years, then how come, with more money, they aren't doing a better job in bringing in more visitors? Their marketing thinking cries out for an overhaul."

He said inflation, population growth and word-of-mouth advertising -- and not the LVCVA's marketing program -- account for the 2.6 percent annual increase.

"If I had a marketing department in a private company that spent $30 million to $40 million a year, I'd better see an increase of more than inflation or population growth or I'd soon see my marketing department out the door."

He also compared the LVCVA's convention operations with those of his Sands Convention Center, saying the latter "will generate substantially more at the bottom line than the LVCVA will gross at the top line. And we run more net usable square feet of space with one-ninth the amount of employees."

The LVCVA, he said, "is not marketing for the future, not actively promoting expansion into the broadened markets the emerging (gaming) markets have created.

"Nor are they promoting beyond their tired old concept of 'come to Las Vegas, it's cheap.' The LVCVA is still operating under yesterday's paradigms. They keep preaching the $1.99 buffet, while we must start pitching to a higher quality customer without losing the tour and travel end of the market.

"What Las Vegas needs is better growth planning, infrastructure development, more diversified resort casinos catering to new segments of the population.

"Truly differentiated strategies draw new customers segments."

In the past, Adelson said, Las Vegas has relied on a "Field of Dreams" concept: "If we build on the Strip, the the customers will come, no matter what we build."

That concept, he said, "is based on the assumption that the market is unlimited. But no market is unlimited.

"Another flawed assumption is the 'me too' theory of property development based on the same old casino-centric marketing strategies -- to herd the customer into the casino and to provide minimal room creature comforts to keep them there.

"Undifferentiated product additions to the same old rooms, $1.99 buffets and casino lounges wrapped in a thematic facade do not constitute new thinking. They embody the worn-out assumptions which may have contributed to the recent slowdown in growth."

Adelson said Circus Circus, Aladdin and Stratosphere were examples of companies that built "the same old products."

"The Bellagio, on the other hand, is not another 'me too' property. They're truly adding value to the Las Vegas Strip and the attractiveness of the city as a destination resort. They appeal to the high end of the market and they do an excellent job at promoting the players and the high end of the free and independent traveler market."

Adelson said contracts the Culinary Union recently signed with some Las Vegas resort operators prohibit leasing dining space to world-renowned restaurateurs and could slow tourist growth.

"Ask yourself, does that add value to Las Vegas? Or does it subtract value? Will the option of offering the same old hotel food bargains compare with offering famous chefs' culinary delights?

"In order for Las Vegas to become a full destination resort, we must stop dishing out $1.99 buffets and start presenting the restaurant food that will help put Las Vegas on a level playing field with other destination resorts."

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