LVCVA ponders ad contract renewal

By Richard N. Velotta

Friday, Feb. 13, 2009 | 2 a.m.

The Las Vegas Convention and Visitors Authority is expected to consider whether it wants to extend its current advertising agreement with R&R Partners or open it up to competitors.

The original five-year deal was negotiated in 1999 and included an optional five-year extension that was approved in 2003. The extension, which expires June 30, included another five-year option.

Las Vegas Mayor Oscar Goodman, who heads the LVCVA board, and five board members will confer with authority executives about exercising the five-year option or opening the process to other agencies. A vote is likely at the board’s March 10 meeting.

Goodman asked Henderson Mayor James Gibson, Clark County Commissioner Lawrence Weekly and private-sector representatives Kara Kelley of the Las Vegas Chamber of Commerce, Keith Smith of Boyd Gaming and Charles Bowling of MGM Mirage to offer their recommendations on the contract.

The advertising contract is one of the most lucrative offered by the authority, with the agency spending $92 million a year. Under terms of Las Vegas-based R&R’s deal, the PR firm receives a 15 percent authority commission, markups on outside charges, $70 an hour for production services and other expenses involving printing, postage, delivery and travel and entertainment expenses.

The ad contract is coming up at a time when marketing Las Vegas has become crucial.

Kevin Bagger, Internet marketing and research director for the convention authority, told the board that visitation is expected to fall by 4 percent to 5 percent in 2009. In 2008 visitor volume fell 4.4 percent to 37.5 million people.

Bagger also projected hotel occupancy to be 81 percent to 83 percent in 2009. In 2008 the average occupancy rate was down 4.4 percentage points to 86 percent.

The occupancy rate is expected to be affected by the anticipated increase of 13,000 hotel rooms in 2009 with the planned openings of CityCenter, Fontainebleau and the M Resort.

Marketing the destination with advertising and public relations is a key strategy for the authority to reverse plunging visitation numbers.

Terry Jicinsky, senior vice president of marketing, gave an update on the current “Vegas Bound” ad campaign featuring the city playing host to residents of Cranfills Gap, Texas, in December.

A television ad campaign broke in January and the authority is following up with a series of webisodes on the Internet featuring detailed looks at the activities of the Texans. The videos are offered on the visitlasvegas.com Web site as well as on YouTube, an authority partner.

The episodes feature a mother-daughter spa outing, a marriage proposal that occurred with a backdrop of the Bellagio fountain show and Cranfills Gap residents’ adventures at an indoor sky diving venue and at the Las Vegas Motor Speedway.

In addition, a similarly themed print ad campaign has appeared in Conde Nast, Travel + Leisure and USA Today as well as newspapers in California.

Jicinsky said some Las Vegas webisodes were featured on YouTube’s home page and the videos produced more than 100 million impressions.

The LVCVA also collaborated with late-night talk show host Jimmy Kimmel in late January to feature the Cranfills Gaps residents’ Las Vegas trip and the agency estimated that the campaign has received $4.75 million in “earned media,” the approximate value of airtime based on corresponding ad rates.

So far, the results have been positive. Jicinsky said visitation in January was 6 percent greater than in December and the authority’s referrals to partner resorts was up 36 percent.

Authority President and Chief Executive Rossi Ralenkotter said the agency is suspending its in-house policy against doing property-specific promotions of special events.

In the past, the agency has avoided doing that, preferring to let individual properties do their own promotions of major concerts and special activities. But for the immediate future, Ralenkotter said the strategy would be to promote any major special activity in town in an effort to encourage more visitation.