Hey, Vegas: Don’t gouge us

By Richard N. Velotta (contact)

Saturday, Jan. 5, 2008 | midnight

Organizers of the International Consumer Electronics Show are scouting for a less expensive city to stage their convention, one of Las Vegas' largest.

Show exhibitors have complained the rising cost of hotel rooms and food and beverage guarantees are threatening to price show attendees out of the market.

The four-day Consumer Electronics Show opens Monday at the Las Vegas Convention Center, the Sands Expo & Convention Center and the Las Vegas Hilton.

Show organizers say 140,000 people will attend the event, which has been staged in Las Vegas since 1978 and is usually where the latest innovations are introduced.

Hotel rooms and dining options on the Strip have become increasingly expensive in recent years, and the trend seems likely to accelerate as luxury properties such as Palazzo, Encore, CityCenter, Fontainebleau and Echelon open and tourism continues to climb.

Executives with the Consumer Electronics Association, the owner of the show, have asked the Las Vegas Convention and Visitors Authority to lean on resort hotels to keep prices in check.

Karen Chupka, senior vice president of events and conferences for the association, said exhibitors are sending fewer delegates to the show because of the cost.

“It's crazy,” Chupka said. “The rates have become astronomical. Some of the resorts are requiring a food and beverage guarantee on top of the hotel rooms and that has gone up by 365 percent in the past two years. Las Vegas is no longer the cost-effective destination it once was.”

Glenda Brungardt, trade show and event manager for HP Imaging & Printing Marketing, a division of Hewlett-Packard, said her company has had to cut 12 percent to 15 percent of its show personnel this year because of rising costs.

Brungardt, who serves on an advisory board that addresses show concerns, said high hotel costs are the No. 1 complaint.

“I think the bad part of it is that the hotels are raising rates because they can,” Brungardt said. “They know that with the high demand generated by the show, they can raise them.”

Brungardt wouldn't name specific properties she says are gouging conventioneers, calling it a citywide problem, but said some properties that normally charge $79 to $159 a night for rooms during less crowded weeks are asking $500 to $700 a night during CES and are requiring a three- or four-night minimum stay. In addition, hotels require a minimum block of rooms to be purchased and, in some cases, require a food and beverage guarantee of $75 to $100 per room.

“It requires companies to have some kind of function at the hotel, whether it's an opening reception or a dinner,” Brungardt said. “I'm sure that takes some money out of the pockets of other restaurants around town.”

Chris Meyer, vice president of convention center sales, said he is trying to mediate a solution, but noted the convention authority has no control over hotel rates.

“The resorts were receptive to meeting,” Meyer said, “but we as an organization will never see what the results are because the negotiations between the exhibitors and the resorts are private and because it's a free market -- everybody does their own business dealings.”

Losing CES not only would represent a large economic hit to Las Vegas, it also would be a blow to the city's visibility.

Many products, from video cassette recorders to TiVo, have made their debut at CES, and news stories about those introductions carried Las Vegas datelines.

The convention authority is holding dates for CES through 2025, but has signed leases with organizers only through 2011.

The question no one seems willing to answer is: Would CES really pull out of Las Vegas, or is it bluffing to drive down costs?

Chupka said her association has talked with convention hosts in Chicago and Orlando, Fla., both of which have exhibit halls capable of hosting a show as large as CES.

But those cities could have drawbacks for conventioneers: fewer entertainment and dining options.

Conventioneers also like the proximity in Las Vegas of hotels to convention venues and the airport.

In addition to Chicago and Orlando, Chupka and Brungardt said, international competition is beginning to appear.

“Companies that exhibit at this show have large markets overseas, so there's nothing that says this show has to occur in the United States,” Brungardt said.

Some of that international competition could have local roots.

Las Vegas Sands, which operates the Venetian and Palazzo and the Sands Expo Center, opened a large convention center at its Venetian Macau and is building a resort with a convention center in Singapore. Convention facilities also are being built in Dubai.

Although it's not likely that a show such as CES would bolt the United States, organizers could produce multiple shows that could siphon off visits to Las Vegas. In the past, two CES shows were staged, one in the winter and one in the summer. Several organizations also swap venues to appeal to conventioneers in other parts of the country.

“We've had a great association with Las Vegas,” Chupka said. “But we have to listen to our own customers and watch out for the interests of our show.”

A version of this story appears in In Business Las Vegas, a sister publication.

Richard N. Velotta can be reached at 259-4061 or at velotta@lasvegassun.com.