LVCVA plans for post-war challenge

By Richard N. Velotta (contact)

Friday, April 4, 2003 | 11:02 a.m.

The end of the war with Iraq will be a good opportunity for Las Vegas to respond to pent-up tourism demand, but it will also usher in a new series of challenges for the resort destination, a Las Vegas Convention and Visitors Authority executive said Thursday.

Terry Jicinsky, senior vice president of marketing for the LVCVA, said Las Vegas will still have tremendous competition, airlines will continue to operate sluggishly and Interstate 15, the key highway linking the city to Southern California, will still need costly improvements.

But there are additional issues on the horizon that already are being considered by the marketing organization that advertises Las Vegas with a $169 million budget, using revenue generated by room taxes. Jicinsky listed new high-roller competition coming on line in the months ahead and the development of advertising and marketing campaigns to address safety issues associated with the years-away shipment of nuclear waste to Yucca Mountain. He also said Las Vegas must attract 4 million additional visitors a year by 2005 in order to fill 8,300 new hotel rooms that will come on line by then and still maintain current occupancy rates.

The LVCVA executive was the keynote speaker for the Las Vegas Commercial Real Estate Trends Breakfast sponsored by Colliers International and Restrepo Consulting Group LLC.

About 100 attended the biannual commercial real estate event, which was co-sponsored by First American Title, the McDonald Carano Wilson law firm, First National Bank of Nevada and In Business Las Vegas, a sister publication of the Las Vegas Sun.

Las Vegas already had its share of marketing challenges, even before Americans went to war in Iraq and a mysterious disease known as SARS -- severe acute respiratory syndrome -- appeared in Asia.

Jicinsky said greater competition is closing in on Las Vegas, with gambling legal in 48 states and 17 gaming venues active with a 250-mile radius of Las Vegas. He said a casino is available within a four-hour drive of every major city.

Next, Jicinsky said, are what he calls "customer satisfaction issues" involving the construction of infrastructure. One of the most critical of those issues is the widening of I-15 between Southern California and Las Vegas, a project that is being completed slowly. He also said transportation planners already have begun investigating the need for a new freeway connecting I-15 with communities north of Los Angeles to break some of the gridlock that occurs on busy weekends in Las Vegas.

Other customer satisfaction issues, Jicinsky said, involve additional development at McCarran International Airport and the four-phase development of the Las Vegas monorail system. The first phase of that project is expected to be completed by January.

While the war, SARS, the threat of terrorism and the shaky economy have put a dent in tourism -- especially international visits -- Jicinsky said Las Vegas has weathered the challenges, thanks to a strong convention calendar in the first quarter and the opening of Celine Dion's new show at Caesars Palace. More spring break visits, Final Four basketball tournament gamblers and the National Association of Broadcasters convention are coming up later in April.

While the Asian market is wobbly because of war jitters and the SARS scare, Las Vegas is getting a shot in the arm with Virgin Atlantic Airlines' Virgin Vacations division. Virgin representatives visited about 150 West Coast tourism executives at Bellagio Thursday afternoon and said summer vacation slots are about 78 percent sold out already.

The airline plans to add a third weekly round-trip flight between London's Gatwick International Airport and Las Vegas beginning in September to handle additional demand.

Jicinsky said the LVCVA's analysis of how well the city is faring would include the effects higher gasoline prices are having and how last-minute Internet bookings are affecting the market. The LVCVA also is considering a trend that Las Vegas tourists are spending less per trip on gambling, meals and shopping than they did last year.

Future challenges await the LVCVA. Jicinsky said his researchers would look into what the construction of casinos in Macau will mean to Las Vegas.

"We're expecting there to be a curiosity factor, especially among some of the high-rollers," Jicinsky said in an interview after the presentation. "We're expecting a fall-off in baccarat play, but we're thinking it's only going to be a short-term effect and that players will return to Las Vegas after seeing what the Macau casinos have."

Two Las Vegas casino operators, Steve Wynn, who is building the $2.4 billion Le Reve on the Strip, and Sheldon Adelson, whose 1,000-suite addition to the Venetian will come on line later this year, have received licenses to operate casinos in Macau. Both are expected to open next year.

Jicinsky said some analysts believe that having Wynn and Adelson doing the building in Macau will ensure that the Las Vegas corporate culture will be well represented when the Chinese come calling and that players eventually will be invited to Las Vegas.

Another issue on the LVCVA radar screen is the controversial Yucca Mountain nuclear waste repository.

"We want to be ready to address that when it becomes an issue to the American public," Jicinsky said.

Some experts expect a fall-off in tourism when the Department of Energy begins transporting nuclear waste to a repository that would be built about 90 miles northwest of Las Vegas. "We're not going to be the ones to bring it to the forefront," Jicinsky said. "When will that happen? That's the $64,000 question. But we're going to be ready with television and a print media ad campaign when it does."

Le Reve is expected to open in 2005 and expansions are planned at the Venetian and Mandalay Bay. Jicinsky said 4 million additional visitors would drive occupancy rates to 90 percent to 95 percent on weekends and 80 percent to 85 percent on weekdays.