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November 28, 2014

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Pssssssst! Cut-rate rooms in classy Vegas

Ad campaign leaves out Strip’s biggest bargains in years to maintain image

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Ad campaigns by the Las Vegas Convention and Visitors Authority such as “Vegas Right Now” promote excitement and luxury.

In Today's Sun

Las Vegas is on sale, with room rates below $100 a night at prominent Strip hotels.

But you’d never know it from the Las Vegas Convention and Visitors Authority’s latest advertising campaign. It’s called “Vegas Right Now” and it urges consumers to come to Vegas for fun and excitement.

But, deliberately, there’s not a word about some of the biggest bargains in years.

In an era of luxury development, the visitors authority thinks it’s bad form to make references to “affordable” and “cheap,” once honorable descriptors for a town that gave away rooms and meals.

That strategy is raising eyebrows among some experts who say it’s foolhardy for the city’s marketing gurus to ignore the obvious benefits of pitching Las Vegas as a bargain. After all, they say, we’re in a downturn that is affecting the spending habits of everyone who is considering visiting Las Vegas, so we should play to the times.

UNLV hotel management professor Jeff Voyles disagrees. A former MGM Mirage executive, he says it would be disingenuous for Las Vegas to market itself as a bargain because room rates will bounce back and the Strip will be punctuated by expensive, high-rise hotels bargain seekers can little afford.

“We can’t change our market segment based on a dip in the economy,” Voyles said. “We have to be able to sustain the growth that we have.”

There’s also politics to consider.

The Las Vegas Convention and Visitors Authority represents properties of all stripes across the Las Vegas Valley, from the most expensive resorts to the cheapest of hotels.

“The goal of our advertising program is to find a common thread, an umbrella concept so that individual hotels can fit their own strategies underneath that umbrella,” said Terry Jicinsky, senior vice president of marketing for the visitors authority.

The common denominator among hotels isn’t price, Jicinsky said, but Las Vegas’ overriding sense of excitement and possibility.

That makes the visitors authority’s ads unlike most seen on TV or in print in this country. Instead of “retail” campaigns, which typically motivate customers to buy based on price, ads for Las Vegas have always been brand campaigns. That’s true even for ads such as “Vegas Right Now,” which are intended to revive tourism during this slump.

“We want to engage the emotions of the visitor and generate excitement about what’s happening in Las Vegas,” Jicinsky said. “It’s the same business strategy in good times as in bad times. It’s up to the individual hotels to communicate price.”

That’s the way the big hotel companies — some of which have representatives on the visitors authority’s board of directors — like it.

Price is too sensitive and volatile a topic for the visitors authority to tackle and should be the responsibility of operators to communicate to their customers, MGM Mirage spokesman Alan Feldman said.

“Everyone’s in different places and value is a difficult thing to quantify,” he said. “It’s best to let us define it in a way that makes sense for our customer group.”

Anthony Curtis, who publishes a room rate survey twice a year in his Las Vegas Advisor newsletter, says marketing authorities are passing up a golden opportunity to run the kinds of price-sensitive ads that will get the attention of the vast majority of Americans.

“Everyone knows that times are tough. Does it put some kind of black eye on the city to say that things are cheap right now? That’s head-in-the-sand kind of stuff,” Curtis said. “Getting a bargain is always a powerful thing, no matter what your social strata.”

“To not play this up right now,” he said, “is crazy.”

Pitching affordability is a sound strategy but would be difficult for the visitors authority to pull off, said Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.

Even a cleverly worded ad with references to bargains might offend high-end properties and, at worst, fuel a price war, he said.

Many businesses, including hotels, are highly sensitive to price wars, which have devastated other industries such as airlines and computer technology and have occurred on a lesser scale in other casino markets.

“The trick is, how do you get the word out without creating a price war,” Eadington said. “The stereotype image of Las Vegas as a place where everything was cheap is an image that Las Vegas didn’t necessarily like. Instead, they’re trying to attract customers who think very little about price and instead want prestige.”

And then there’s Orlando, Fla., which is reaping the benefits of having cultivated its image as an affordable destination for families.

The tourism slump has dampened room tax revenue in Las Vegas, but the equivalent tax in Orlando is up 5.7 percent in the first quarter, a sign that the region is weathering the storm better than most.

The Orlando/Orange County Convention and Visitors Bureau launched an ad campaign a few months ago that appeals to moms and dads who want to reconnect with their kids. It’s a message that plays well during tough economic times when people feel financially and emotionally beaten down, visitors bureau President Gary Sain said. That message wouldn’t work in Las Vegas, which stands for adult freedom — a message that helped put Las Vegas over the top as the nation’s leading convention and tourist destination.

That success in Las Vegas has come at a smaller cost of pricing out some leisure travelers, while Orlando, which has few high-end hotel rooms, is still primarily known as a value destination, Sain said.

While major gaming companies reported revenue and profit declines in the first quarter, Walt Disney Co., in part because of increased business at Disney World in Orlando, reported an increase in earnings, topping analysts’ expectations in the first quarter. The theme park has been helped by foreign tourists capitalizing on the weak dollar as well as an effort to offer more affordably priced rooms. A recent ad campaign from Disney also emphasizes affordable vacation packages for families.

By contrast, MGM Mirage’s approach is subtle, offering room deals on its Web site via small-print announcements and pitching stories about lower room rates in regional newspapers across the country. In response to the downturn, the Strip’s largest operator is running a least 30 promotions — more than usual — packaging rooms with other perks such as spa passes and dining discounts.

Not all hotels emphasize price because luxury and convenience are more important for some travelers, said Howard Lefkowitz, president of Vegas.com, which books Las Vegas hotel rooms. The Web site is owned by the Greenspun family, which also owns the Las Vegas Sun.

Rates at Las Vegas hotels are down by as much as 8 percent on average, he said. Hotels are offering more promotions than ever these days, not simply because of the downturn but because travelers want more options, Lefkowitz said.

“It’s not all a price-driven game. I may want a suite at one of the luxury hotels on the day I want it,” he said. “People are looking for value but that value depends on their particular definition of value.”

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