Low Comdex room rates reflect industry weakness

David Strow

Monday, Oct. 29, 2001 | 9:43 a.m.

Not even Comdex, historically Las Vegas' largest convention, appears to have the power to revive slumping midweek business trends for the city's casino hotels.

A recent survey conducted by New York brokerage Bear Stearns shows room rates across the Strip are going for an average of $119 per night on Nov. 14, the tail end of Comdex week.

That's a Wednesday, a day many Comdex attendees are heading home. But it is down 36 percent from last year's Wednesday during Comdex week.

Key3Media, the organizer of Comdex, is projecting attendance of 125,000 to 150,000 this year, compared to 210,000 in 2000. About 750,000 square feet of convention space is expected to be taken by 2,000 vendors, compared to 1 million square feet of space by 2,300 vendors in 2000.

"We've got some rooms to fill over Comdex," said Michael Gasta, vice president of sales for Park Place Entertainment Corp., owner of five Strip hotel-casinos.

MGM MIRAGE's five properties all also have availability during Comdex week.

"Bookings are strong for Comdex, but we're certainly not seeing the rates we're used to," said MGM MIRAGE spokesman Alan Feldman.

Still, the picture is a little more heartening during the Sunday through Tuesday peak of Comdex week, Gasta said.

"Everything I'm looking at is showing us sold out or very close to it (Sunday through Tuesday)," Gasta said.

While weekend business has been slowly recovering, midweek business has been a particular challenge for Strip operators since Sept. 11. And even a below-normal Comdex provides a relative boost over the past several weeks -- Comdex midweek room rates are, on average, 22.8 percent higher than they were on Oct. 10, Bear Stearns reported.

Weekend rates, meanwhile, appear to be softening. At $164 per night the weekend after Comdex, average rates are down 16 percent over last year, and down 8 percent from Oct. 10.

"With the fall convention season winding down around Thanksgiving, we believe the outlook for weekday room rates, as well as occupancies, will continue to be challenging," Ader wrote.

But Comdex was already shaping up to be a challenge even before Sept. 11, as a downdraft in the technology industry forced companies to begin slashing travel budgets.

"Comdex reflects the constituency it serves, and we serve technology (companies)," said Fred Rosen, chairman and chief executive of Key3Media. "So if all of the technology industry is having a difficult year, we will reflect what's going on around us."

The Bear Stearns survey uses rate quotes provided to "free-and-independent travelers," not the rates paid by those who book rooms through Comdex. During Comdex week, that makes up a substantial number of the rooms sold by Strip hotels.

But Park Place and other operators have been granting breaks in these rates to Key3Media to spur business, Gasta said.

"We share their concerns about attendance," Gasta said. "We assured them we'd work to reduce our rates, assuming the savings is passed on to (Comdex visitors). They continue to work with us to try to fill rooms."

Only four properties are quoting rates higher than last year's: MGM Grand (up 50 percent), Las Vegas Hilton (43 percent), Aladdin (14.4 percent) and Mandalay Bay (11.2 percent). The Las Vegas Hilton is directly adjacent to the Las Vegas Convention Center, while MGM Grand is hosting the keynote speech of Microsoft Chairman Bill Gates.

Every other property in town is down at least 19 percent. Seven properties showed declines of 50 percent or more in the Bear Stearns survey: Flamingo Las Vegas (down 77.5 percent), Caesars Palace (68 percent), Circus Circus (65 percent), Venetian (63 percent), Bally's Las Vegas (60.5 percent), and Excalibur (50 percent).