Visitation figures finally up, but Las Vegas can’t start partying yet

By Richard N. Velotta (contact)

Fri, Nov 20, 2009 (3 a.m.)

It has been awhile since Southern Nevada tourism leaders had anything to cheer about after months of visitor volume declines.

And although the latest numbers released by the Las Vegas Convention and Visitors Authority aren’t worthy of a big party, a few rays of hope were evident.

The biggest cheers went out for some of the categories that were in the black for the first time in months. Convention attendance was up 12.2 percent compared with September 2008, from 357,525 to 401,319, the first monthly increase since July 2008.

But don’t get too excited about the double-digit percentage increase. Part of the reason for the dramatic increase was because two big shows in 2008, the MAGIC fashion show and World Market Center’s fall show, were bridged over from August. This year, they were completely in September, so all of the attendance was counted that month.

Another positive from the September stats is that visitor volume was up 4.3 percent over last year, from 2.9 million people to 3.1 million. That includes some of that convention boost. The good news about those numbers is that it’s the first time since May 2008 that Southern Nevada has seen a percentage increase.

A few other positives were in the numbers.

Citywide occupancy fell minimally, from 84.3 percent in September 2008 to 83.2 percent this September. But if you dive deeper into the occupancy rates, you’ll find that weekend occupancy was up 3.1 percentage points, from 88.4 percent to 91.5 percent for the month. In addition, motel occupancy was down only fractionally — from 52.1 percent to 51.8 percent.

Meanwhile, some big pluses can be found in traffic patterns. The average daily auto traffic on Interstate 15 at the Nevada-California border was up 9.9 percent to 38,687 vehicles, and the average daily auto traffic on all major highways was up 7.2 percent to 84,011.

What do the numbers tell us? That the pattern since early in the recession is still there. Business travel is off and for Las Vegas that means convention travel. Midweek occupancy (read conventiongoers) was off 3.2 percentage points to 79.6 percent.

But the weekends draw visitors, mostly from Southern California, and a lot of those folks don’t care if they stay in a motel and eat fast food.

Those coming aren’t spending money as freely as they once did. In part, it’s because they don’t have to — to compete with other nearby destinations and with themselves, resorts have reduced room rates. Gambling budgets also have been slashed. Nowhere is this more evident than in the average daily room rates and gaming revenue statistics.

In September the average daily room rate was down 19 percent to $91.18. For the nine months of 2009, it’s off 24.7 percent to $92.42.

Clark County gaming revenue fell 9.3 percent in September to $774.1 million. For the first nine months of the year the county’s gaming revenue is off 12 percent to $6.66 billion.

Looking to the months ahead, MGM Mirage’s CityCenter and its centerpiece resort Aria will open as will a new tower at downtown Las Vegas’ Golden Nugget. But those openings present some challenges for the market.

The city’s room inventory already is 2.5 percent higher than it was a year ago, thanks to the openings of Aliante Station in North Las Vegas and the M Resort in Henderson. The addition of Aria’s and Golden Nugget’s rooms will bump that up by about 5 percentage points.

The average daily room rate will likely climb — but probably not to the level it was a year earlier, and it’s an artificial increase.

The million-dollar question is: Will the buzz for CityCenter create enough interest to at least offset the increased capacity entering the marketplace? And will those people coming to see CityCenter spend money at Aria and other properties’ restaurants, on “Viva Elvis” and all the other great entertainment the city and in all the city’s casinos?

The answer will determine whether September’s numbers are just another blip on the graph or the start of the economic turnaround all of us have been waiting for.

Filling the gaps

It didn’t take long for some airlines to announce they would pick up the slack on some of the routes to Las Vegas that US Airways is abandoning early next year.

Cathy Tull, LVCVA senior vice president of marketing, said she and her colleagues got only 24 hours to celebrate the arrival of British Airways with nonstop flights from London to Las Vegas before getting news that US Airways was shutting down a big percentage of its Las Vegas operation.

Experienced McCarran International Airport officials have long said that when capacity disappears at the airport, there is always some airline to pick up the slack. But skeptics worried that the sad state of the airline industry would translate into no capacity increases when US Airways dumped its nonstop flights to 13 destinations.

But Tull said last week that Spirit Airlines, which operates primarily along the East Coast and has numerous flights to the Caribbean, would bump up its Las Vegas flights to Detroit and Fort Lauderdale, Fla., beginning May 1. And, Alaska Airlines plans to add a Seattle flight in February.

Although US Airways didn’t have a Denver route to cut, United Airlines is adding a Las Vegas-Denver route to its schedule in February, Tull said.

On the international front, AeroMexico, which has eight flights a week to Las Vegas, plans to bump up its schedule next year and Canadian discounters Sunwing and WestJet are planning more Las Vegas lift, including a nonstop to Montreal on rapidly expanding and future Southwest Airlines partner WestJet.

Tull also had some good news about conventions.

The convention authority has secured 23 leases for shows that are either new to Las Vegas or haven’t been here in five years. Total attendance for the shows is estimated at 990,000, and the leases are spaced from next year to 2015.

On the consumer side, the authority learned that Las Vegas would be the West Coast headquarters for “Dick Clark’s New Years Rockin’ Eve” on ABC this year.

Also, the organizers of Latin Couture Week 2010 are looking at Las Vegas for the headquarters of next year’s Latin Couture-Latin Divas Week. It’s a major fashion event, and organizers are eyeing September dates.

Count on him coming back

A 22-year-old mechanic from Anchorage, Alaska, attending this month’s Specialty Equipment Market Association auto parts show is likely to make a return trip to the convention next year.

James Corkery won a $252,640 jackpot on a Wheel of Fortune Quarter MegaJackpot machine at Luxor on Nov. 8. He and a friend were in town for the trade show.

Corkery says he plans to use the money to finish school, put a down payment on a house and pay off his Harley Davidson bike.

Education investments

UNLV President Neal Smatresk told representatives of the Las Vegas Chamber of Commerce last week about how Raleigh-Durham, N.C., went from an agricultural economy with a big tobacco crop to a center of advanced technology, known simply as “The Triangle,” in just 50 years.

How? Over the terms of three governors, the state invested heavily in education, he said, turning the region “from hillbilly to intellectual cradle.”

The parallel for Las Vegas is the long-envisioned, but never-realized goal of transforming the city from a one-industry tourist mecca to a diversified economy. It’s a goal that is hard to accomplish when higher education budgets are slashed by 24 percent as they were this year.

Admitting that moving toward diversification is “glacial — and that’s optimistic,” Smatresk vowed to do something about it instead of just talking about it.

“We want to be the new American university,” he said. “We’re not interested in being Harvard in the desert.” Part of that, he said, is developing programs that will provide leadership in water and energy conservation, transportation and public land-use. UNLV also seeks to boost health care and education programs.

Although UNLV recently received some major donations from people such as Kirk Kerkorian, higher education needs the support of business organizations such as the chamber. Smatresk’s charismatic style seemed to play well in an environment where keeping tax rates low has been the primary goal.

If Smatresk and his philosophy can persuade the chamber and other businesses to invest in education, including supporting initiatives to substantially increase funding from the Legislature, Las Vegas can avoid the boom-bust cycles that occur when a place becomes too dependent on one industry.

Richard N. Velotta covers tourism, technology and small business for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4061 or at rick.velotta@lasvegassun.com.