Laughlin sees its gaming market coming back to life

John Wilen

Friday, July 9, 1999 | 11:41 a.m.

LAUGHLIN -- Laughlin's glory years may have come to an abrupt end in the mid-1990s, but the pendulum of fortune now seems to be shifting the other way for this small city on the Arizona border.

After five years of declining visitor volumes and gaming revenues, both figures are trending up. Across the boards, Laughlin boosters and gaming executives say the luster is wearing off the Indian casinos and Las Vegas megaresorts that drew tourists away during the mid-90s.

Visitor volume to Laughlin increased 2.2 percent, from 381,737 in April 1998, to 390,277 this April. Gross gaming revenue increased 6.8 percent, from $42.1 million last April to $45 million this year.

"Things have turned around for Laughlin," said Mike Scanlon, director of marketing at Laughlin's Riverside hotel-casino.

"Things are better this year than last year," agreed John Hastings, general manager of the Pioneer hotel-casino. "I believe we're on our way back."

The question now, local officials say, is whether this resort town of 8,500 south of Las Vegas can get the infrastructure improvements it needs to keep the ball rolling.

Those needed improvements sound similar to the litany of things Las Vegas tourism officials want: better highway access from feeder markets, better air service and more convention space.

The lesson of the post-1994 market downturn was a simple one, officials say: if the resorts work together, they can make Laughlin a success.

"We worked hard for four to five years, and we're just starting to see some return on that work now," said Jo Elle Hurns, executive director of the Laughlin Chamber of Commerce.

If Laughlin's resorts continue working together, Laughlin will get the infrastructure improvements it needs to keep its gaming market growing, she said.

Hard times

In 1966, Laughlin was known as South Pointe, and the only resort in town was Don Laughlin's 12-room Riverside Resort. The town grew slowly, reaching a population of only 95 by 1984, when neighboring Bullhead City, Ariz., began its ultimately successful incorporation effort.

By 1986, five river-front hotel-casinos offered 2,000 rooms, enjoyed 95 percent occupancy and generated $200 million in annual gaming revenue. Services have always been a problem in Laughlin, as the Wall Street Journal noted in a 1987 article: "This town would be laughing all the way to the bank -- if only it had one!"

The boom in Laughlin resort casino construction occurred in the late 1980s and early 1990s. By 1994, the town's room inventory reached 11,035. Visitor volume hit 4.75 million that year. Gaming revenues peaked at $539.8 million in 1993.

"During the boom, we were laughing all the way to the bank," said Hurns. "Then we got a wake-up call."

Visitor volume fell from its peak of 4.75 million in 1994 to 4.47 million in 1995, 4.65 million in 1996 and 4.51 million in 1997. By last year, visitor volume had dropped to 4.29 million.

Gaming revenue, meanwhile, plummeted from its 1993 peak to $482.3 million in 1997. Gaming revenue rebounded in 1998 to $491.3 million.

Population continued to grow, reaching 8,500 last year. In comparison, neighboring Bullhead City sports a population of 30,000.

Talk to anyone in Laughlin, and they'll offer the same reasons for Laughlin's downturn: Indian gaming in Laughlin feeder markets and the megaresort boom in Las Vegas.

"Indian gaming had a huge correlation with the drop in our revenues," said L.A. Brown, director of marketing for the Edgewater hotel-casino. "It kicked our butts."

At the same time, Brown said, "Las Vegas became a complete, must-see destination."

The confluence of events led to Laughlin's hard times. But it also prompted Laughlin's resorts to start working together for the first time in an attempt to bring tourists back.

"It took the wakeup call of the gaming revenue starting to flatten for us to realize that we had to diversify," said Hurns.

At first, the resorts just talked about the things Laughlin needed to turn itself around.

"We made a list of things we thought were underestimated," said Hurns.

But the resorts soon formed an official body -- the Laughlin Tourism Committee -- to coordinate their activities and act as their voice to the world.

Through the LTC, Laughlin's resorts have coordinated their advertising efforts, jointly sponsored city-wide events like the annual Rodeo Days, River Days and Laughlin River Run, and are working on infrastructure issues as one.

"That absolutely was a turning point, as far as I believe," said Brown. "I really do feel that it has contributed to a lot of unity."

"We're giving people more reasons to come to Laughlin," said Chuck Davison, director of marketing at the Golden Nugget Laughlin.

Infrastructure needs

But getting to Laughlin is still somewhat difficult, especially if you're coming from Southern California, officials say.

Laughlin is a mature gaming market. About 98 percent of its visitors come to town by car and 44 percent of those come from Southern California.

"We are really a regional destination market," said Hurns. "It's not a fly-in market."

For visitors from Southern California, the best route to Laughlin is Highway 162 -- the Needles Highway -- connecting Laughlin to I-40 at Needles, Calif. The highway is used by 2 million visitors annually. But the Needles Highway is in poor shape, and efforts to improve it have long been stalled in a morass of multi-jurisdictional government red tape, Hurns said.

"The roadblock has always been San Bernardino County saying it's a gambler's highway," said Hurns.

The Needles Highway is 28 miles long, she said. The 14-mile Nevada stretch is a modern, four-lane highway, she said. The 14-mile California stretch is a two-lane "crummy road," said Hurns.

"It's in great need of repair," said Scanlon. "It wasn't designed for the level of traffic that it's handling."

"When 98 percent of your visitors come by vehicle, it's essential that your roads be adequate," said Hurns.

Thanks to the new cooperative spirit of the Laughlin casino resorts, the Needles Highway improvements may finally be on their way. Hurns said a plan is under consideration in which Clark County and the state of Nevada will contribute $10 million to widen the road, matching $10 million that will be contributed by the City of Needles and San Bernardino County.

The project has a precedent in the plan to spend Nevada dollars to widen I-15 near Barstow, Calif., to improve access to Las Vegas.

But the Needles Highway plan had no legs until the Laughlin Tourism Committee got involved and threatened to bypass the Needles Highway altogether and turn U.S. 95 into the main gateway to Laughlin, said Hurns.

"Suddenly, they had an interest in protecting their little underdog Needles, and maybe coming to the table," said Hurns of San Bernardino County.

Laughlin boosters are also working to increase air service to the city.

The Laughlin/Bullhead City Air Terminal opened in 1992, and more than $25 million has been invested in the airport to date. But Laughlin has struggled to attract and retain regularly scheduled air service.

Air service to Laughlin comes in the form of a daily "overpriced" America West commuter flight from Phoenix, said Hurns. Advanced non-refundable tickets for flights from Phoenix to Laughlin start at $179. Travelers from other cities are routed to the Phoenix commuter flight. Prices range from $219 for San Diego round trips and $223 for Los Angeles round trips to $300 for Reno round-trips and $400 round-trips from Chicago and Minneapolis.

Also serving Laughlin is SunWest, a charter airline; and Sun Country, an airline that flies into Laughlin from a few midwest markets on Mondays and Thursdays except during summer, said Hastings.

Reno Air once served Laughlin but found its service was not economically feasible, said Brown.

"Unfortunately, that did not work out for us," said Brown.

Laughlin was once served by Morris Air of Salt Lake City. But when Southwest Airlines bought Morris Air, Southwest moved Morris' planes to its other markets, said Brown.

Laughlin's air hopes currently rest on Reno Air founder Joe Lorenzo, who is working to launch a new startup airline, Laughlin Jet Express. LJE would provide service to Laughlin from southwest feeder markets like Phoenix, Los Angeles and San Diego, said Hastings.

"The idea there is to be able to offer very low airfares -- $49," said Hastings.

LJE is still seeking financing, said Hastings.

Today would not be soon enough for air service, officials say.

"We're looking forward to having air service in here," said Scanlon. "The majority of the properties will be behind that effort."

Most Southern Californians will not drive several hours to Laughlin when they can fly one hour to Las Vegas, said Davison.

"If we can get destination air service into this market ... it'll only change things here for the better," said Davison.

LVCVA marketing

While Laughlin officials laud the job the Laughlin Tourism Committee has done to turn Laughlin around, they are also pleased with the way the LTC has improved the city's relationship with the Las Vegas Convention and Visitor's Authority.

Laughlin, like many other Clark County submarkets, has had its run-ins with the LVCVA over the years. And like the other submarkets, Laughlin's complaints have usually centered on a perceived imbalance between the amounts of money Laughlin resorts pay the LVCVA in room taxes and the amounts they get back from the LVCVA in the form of promotions and advertising.

Many officials interviewed for this story feel the LTC -- by allowing Laughlin resorts to speak to the LVCVA with one voice -- has largely resolved the imbalance.

"I was probably one of those people," who used to criticize the LVCVA, said Brown. "They just kind of did what they thought needed to be done."

Now that they are organized into the LTC, said Brown, the LVCVA gets one consistent message from Laughlin. In the past, the LVCVA heard different messages from different resorts, part of the reason few resorts felt the Authority was doing a good job marketing Laughlin.

"I think we finally got on the same page," said Brown.

Does Brown think Laughlin gets back from the LVCVA what it pays in?

"I do now, yes," said Brown.

Not so said Andrew Klebanow, vice president of marketing for Santa Fe Gaming Corp. of Las Vegas, owner of the Pioneer hotel-casino in Laughlin.

"Does more money go up than comes back? You betcha," said Klebanow.

Klebanow and Hastings would like to market Laughlin as a low-cost alternative to Las Vegas.

"I would like to have an ad campaign that says 'think less of Laughlin,"' said Hastings.

But that will never happen because the LVCVA's primary responsibility is to market Las Vegas, said Klebanow. There is no way the LVCVA would develop a campaign that pits Laughlin against Las Vegas, he said.

"It would be difficult if not impossible for us to conduct an advertising campaign that would show Las Vegas in a negative light," said LVCVA spokesman Rob Powers.

If the LVCVA were to conduct such an advertising campaign, it could as easily run a campaign urging people to go to Las Vegas instead of Laughlin, said Powers.

"We take just as seriously our responsibility to fill rooms in Laughlin as our responsibility to fill rooms in Las Vegas," said Powers.

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