Q&A: Robert Graff

By Richard N. Velotta

Friday, Feb. 5, 2010 | 3 a.m.

For a company operating in a global market, it’s a plus to have a marketing executive fluent in seven languages.

Robert Graff, corporate vice president of marketing for the Papillon Group — a company composed of Papillon Grand Canyon Helicopters, Grand Canyon Helicopters, Grand Canyon Airlines, Scenic Airlines and Grand Canyon Coaches — has that skill set.

Graff oversees strategic planning for 38 international offices, advertising, product development, consumer and Internet marketing for Papillon and is involved with the Best Vegas Attractions group, a partnership among Southern Nevada tourist attractions.

Graff talked with In Business Las Vegas about Las Vegas-based Papillon and its strategies.

IBLV: You have been in the air tour industry for a long time. What are the biggest changes you have seen since you began?

Graff: There has been a lot of changes. The establishment of the route structures over the national parks is one. That went into effect over the Grand Canyon in 1987. There was the expansion of new travel destinations. Monument Valley (on the Utah-Arizona border) became a targeted destination for visitors.

Is that because so many people have seen Monument Valley in movies?

When you flash back and look at some of the old Marlboro commercials and the John Wayne movies, and you’ve got all those cowboys-and-Indians scenes, that all took place in Monument Valley. So that became a destination for a Vegas-bound visitor looking for something else to do. Bryce Canyon (Utah) came into play with air touring. And, wow, look at what Grand Canyon West has become. Big changes.

What are the biggest issues facing the industry today?

Some of the biggest issues facing our industry is how you balance visitors who want to access the national park who don’t have an opportunity to go hiking all the way down, who physically cannot go hiking through the canyon. How do you balance that air-touring component? How do you protect the national park and the tribal lands we visit? How do you submerge a customer into that unique experience, but at the same time not really leave any footprints? It’s that balance that we all try really hard to maintain. Too many visitors take away, but from that experience you’re always creating that special memory that you’re going to leave with and always be reminded of.

In the 1990s, environmental concerns changed the way air tours operated. How has that changed business and do you view it as a positive or a negative?

With the establishment of special flight rules, with the growth of international business coming to Las Vegas, it was almost to the point that anybody who wanted to get involved in the Grand Canyon business could suddenly take their airplane and start flying. I think the establishment of designated flight corridors that broke up and provided special training for people who wanted to be on sightseeing flight legs and routes allowed us to enhance the experience. It allowed you to perfect the narration system, the multilingual components we’ve added. We tailor-make our aircraft to be more air-touring friendly. It meant adding the fourth prop blade on our Twin Otter aircraft that we fly over that reduces the noise emissions over the Grand Canyon or the introductions of the new EC-130 helicopters, which are ultraquiet. Those were some of the fundamental changes. It really kind of cleared the air a lot.

So do you view this as a positive?

Very much so. It’s reaching that balance. It provided an opportunity to protect our resources and yet also balance the need for visitors to be able to experience it. And what a great way of doing it — by air. There’s only so many people you can pass through the gates of our national park system.

Papillon is now the largest Grand Canyon tour operator based in Nevada, right?

As a group — Scenic Airlines, Grand Canyon Airlines, Grand Canyon Coaches, Papillon — and from our owners’, the Halvorson family, point of view, we are the world’s largest air touring company and, by far, the largest Grand Canyon touring company.

Break down your company for me.

In the peak times of summer, we have an interesting mix. We are focused on leisure markets, but our busiest times are the exact opposite of ... Las Vegas. We’re cranking in March, April, May, June, July, August, September and October. But we are extremely slow in the off season. So it’s a very seasonal business we have with a strong international focus. We’re up to some interesting facts about the company that most people don’t know.Systemwide, we are close to 45 helicopters, 18 airplanes. We’re moving close to 3,000 people a day on our buses, airplanes and coaches throughout the national parks. A total of 350 takeoffs and landings a day are being performed, and we do that, sometimes, in six-passenger helicopters. A lot of pilots, a lot of ground personnel are delivering these unique experiences.

How many employees?

About 500. The biggest part is based in Las Vegas and Boulder City. We also have the Grand Canyon south rim, Page-Lake Powell and Grand Canyon West. If you look at our businesses, close to 50 percent of our traffic is coming out of our Southern Nevada markets.

How did the company get there, and who else is on the competitive landscape?

Our chairman, Elling Halvorson, was called out to the south rim of the Grand Canyon by our government for a high-logistics special project: How could we get water from the north rim of the Grand Canyon to service the south rim? He developed the pipeline system and the pumping station on the Colorado River. They laid the pipe systems down the canyon that delivered water and those were done with helicopters. That was done around 1965. Customers would always come up to the Grand Canyon and see these helicopters and say, “Hey, how can I see this?” That’s what started the helicopter side of the business, with tours of the Grand Canyon. On the fixed-wing (aircraft) side, Grand Canyon air touring started around 1918 with airplane tours of the Grand Canyon.

As far as the competitive landscape, there have been a lot of changes. Over the years, you’ve seen the growth of the helicopter market. Looking back over the last 22 years of air touring, there was at one time up to 10 airplane companies. We’re down to three companies operating. But we’ve seen tremendous growth on the helicopter side. A lot of that has been brought by the introduction of Grand Canyon West and the ability to descend and land on the canyon floor on the Hualapai Indian Reservation. That’s really enhanced the travel experience for the visitor.

What are the advantages of operating from the Boulder City airport?

Well, we also have a base of operations at McCarran (International Airport). McCarran is a very important component to us along with our bases of operations at the Grand Canyon south rim, Grand Canyon West and Page-Lake Powell. Boulder City is of importance in that we built a brand new terminal facility that is able to house all of our brands. Clearly, McCarran is working very hard on a long-term strategy plan to have it more freed up and to have the regional carriers moved to the secondary airports. You saw the development of North Las Vegas, Henderson and Boulder City. For us, Boulder City is very strategically important because it’s right here by Hoover Dam, the second-largest attraction, and we thought that was a very strong benefit. You have a pretty straightforward approach to the Grand Canyon where you’re really not in the highly controlled airspace over McCarran. So there’s an advantage here (Boulder City). And the costs are substantially better. Our tour passengers spend an extra 15 to 20 minutes on transfers down here (Boulder City), where they get their whole video narrations as they’re transferred here by bus. The benefit we have is that, without the air traffic delays and everything, we’re able to maximize a whole extra departure on our airplanes and helicopters that depart from here (Boulder City).

What about exposure?

We have close to 95 people in our transportation department that pick up people from the various hotels. Actually, Boulder City is getting more and more attractive. We’ve got Eldorado Canyon nearby. We now have helicopter service from Vegas to Eldorado Canyon, landing where you can do these great activities like horseback riding, canoeing on the Colorado (River), we’ve got the zipline project out here (Boulder City), we’ve got Hoover Dam nearby. It’s a quaint little town, a bit of a Mayberry-type concept when you come to Boulder City. With the growth of Henderson, no matter where you’re living, it’s not that far of a commute. We also have our whole reservation center out here (Boulder City).

Papillon recently introduced a new tour-packaging model. Explain how that works and why the company went that route.

Specifically this year, we overhauled our product considerably. From a marketing philosophy, we believe if you don’t change, you really die. You have to keep moving and be an innovative leader in the marketplace. We saw a substantial downturn in the tourist visitor (numbers) coming to Las Vegas. What changed was the available discretionary dollar for that tourist. They were cutting back on some of their experiences. So this was our time to look at where they were spending their money, what was of interest to them and what products could we better service them with. With that, when we were looking at the landscape and if you look at the premier five-star hotels that at one point were commanding $400 or $500 a night for some of the rooms, there was a bit of a trading down of that customer who was coming in. They were looking for more value. We have a vertical integration system in our company where we have buses, airplanes and helicopters. We are your ideal choice to deliver a Grand Canyon visitor. We’re not here to tell you that a helicopter, airplane or coach is the best, it’s whatever best fits your budget, the amount of time you have available and the experience that you’re looking for. So what we’ve done is re-engineered a lot of our packages. Some of the big moves we’ve done is that at Boulder City we have the state-of-the-art EC-130 helicopters. The whole fleet at Boulder City is the EC-130s. We also have the airplane fleet here (Boulder City) for Scenic Airlines and Grand Canyon Airlines. That includes the DeHavilland Twin Otter with the panoramic windows. Those are all based here (Boulder City).You have the streamlined product that allows you to have some great base components. You choose the tour. You can do an air tour of the Grand Canyon and instead of us saying you’ve got to do it this way, we’re giving you the choices. It’s your choice if you want to add the Skywalk. If you wish to land and have a helicopter experience that takes you down to the Colorado River, if you want to sit in the front seat of the helicopter, everything is a bit more on the a la carte side, but we provide you the basic components to it. That’s done across the coach product lineup, the airplane product lineup as well as the helicopter product lineup.

When did you start offering that?

That launched Nov. 1. It was a complete repositioning of our product line that allowed us to really create a modular experience. If you want to privatize your experience, you can. You can have your own private helicopter or private airplane standing by The minute we moved to this new concept of “Here’s what we have for you and you choose what is your best experience and how you wish to tailor-make your experience,” our sales increased 62 percent and continue to increase and that’s a very positive sign. We’ve responded to a market niche that was saying to us, “I don’t know if I necessarily need all the bells and whistles — let me choose what’s right for me.”

What’s your best-selling tour package and why does it do so well?

We have a best-selling airplane package and a best-selling helicopter package. The best-selling airplane tour we call our “Visionary Air Tour.” It’s over the heart of the Grand Canyon. You fly over Hoover Dam, Lake Mead and the west part of the Grand Canyon, the extinct volcanoes. It’s your best value for the money and it’s the best family package that we have. It’s priced at around $150 and it gives you this spectacular hour-and-15-minute flight. It’s air touring.

The best helicopter package we have is the “Grand Celebration.” You fly over the Hoover Dam and you get views of the Skywalk and you descend 4,000 feet and land on the banks of the Colorado River. There, we serve you a little Champagne picnic. You really have that contrast of leaving Las Vegas with all the lights and within 40 minutes, you’re right in the middle of nature. It’s a spectacular tour, thanks to the graces of our great working relationship with the Hualapai Indians that we offer this tour.

How does Papillon work with the Hualapai tribal government to bring tourists to Grand Canyon West?

It started when Papillon was one of the first companies to have helicopters based at Grand Canyon West. Then, Scenic Airlines, one of our other brands, was one of the first airlines to start operating into Grand Canyon West. Ideally, as all these synergies start coming on board, we’ve now created combination packages that take airplanes and helicopters so you can fly out by airplane, descend and land on the canyon floor with the helicopters out there. We also have coaches under the brand of Grand Canyon Coaches going out to the west rim. It’s a vertical integration system and a great partnership relationship. We’re able to offer three different experiences for you. You’ve got Guano Point with impressive views of the canyon, the Skywalk, which has also helped. We have a lot of Skywalk packages.

We just launched a highly successful helicopter tour with the cooperation of the Hualapais that is taking the helicopters from Boulder City, landing on the top at Grand Canyon West and then having the chance to experience the Skywalk and descend all the way down to the Colorado River. It’s your ultimate package.

What are the financial arrangements with the tribe?

The Hualapais provide us with landing permits, similar to a form of concession when we operate there. For every passenger that we deliver, there is a fee associated with landing on tribal lands. It’s tied per passenger and there are certain lease obligations that we also have in place.

How has the down economy affected the air-tour industry?

We used to have a very premium brand called Grand Canyon Helicopters out of McCarran that had limousines and VIP services. So many people were choosing to favor our Boulder City services. They felt they got the great value out of it and they were choosing to upscale their experiences by adding the Eco-Star helicopters out of here (Boulder City). I think what we’ve seen was the customer was trading down their experiences. They were going away from the premium products, the very high end, and they were trading down. So we’ve seen our bus business increase by 149 percent. We’ve seen the passengers who were experiencing tours who were going to land now choosing to do more air tours over the Grand Canyon. That was some of the adjustments to our particular products. Air touring was dramatically affected.

Obviously, when you have less available consumer dollars, discretionary income, people are wondering where they are going to be spending their money. One of our main advantages is because we are a company so strongly focused in the international market — we have 38 overseas offices that promote our services and we’ve been doing this for many years — we do all our tours in 16 different languages. One of the strengths we had was when the economy slowed down there was still an influx of international visitors coming through. While challenging in some components, while the room rates in Las Vegas got cheaper, that added value was being created and, combined with us re-engineering part of product line, that visitor is getting probably the best deal they have ever gotten. But it took us a bit of time to figure it out. We noticed our booking windows were shrinking. People really didn’t want to part with their money in advance. There was more of a wait and see as to what was happening. I think those were the tougher challenges that we were dealing with.

Was 2009 down from the previous year?

We’re still closing our numbers. When you look at it systemwide, we carried a lot of passengers. Our helicopter services was down around 5 to 8 percent; our airplane services close to 15 to 20 (percent). But our bus services had an increase of 149 percent. Overall, it was a mixed-bag year for us because we were heavily invested in airplanes and helicopters and we were doing our very best to service the business. We’re tweaking our products and services. So this wasn’t one of our more stellar years, especially when we’re bench marking against the previous year, which was a record year for our company. So, not that great, but all indications are for 2010. We’re extremely bullish that everything is in place for a pretty remarkable year.

How do your bookings look for 2010?

Our bookings for 2010, with the changes that we’re doing, are trending up to 60-plus percent. It’s looking very, very good. Since our launch and tailoring of our products, it’s looking extremely strong.

What does your crystal ball say for Southern Nevada’s economy this year?

Southern Nevada’s economy is going to see some immense improvement. A lot of us in sales and marketing have done everything possible to tweak our products to where they need to be. We really got in touch with our customers. I remember the days when Vegas had reasonable room rates and those fantastic shrimp cocktails downtown. If there’s anything we do best, when I look at my colleagues in these hotels, we have some of the most brilliant marketing people in the world. Vegas will always succeed. It has always rebounded. It does it quicker than anybody else. It has some of the best minds in town. We’re starting to see the fruits of that labor. The adjustments are quick, and I think we’re pretty much poised.

Traditionally, international visitors have been among your best customers. Is that still true and what percentage of customers are from overseas?

Close to 65 percent of our customers are from overseas. We’re very bullish. There have been some substantial changes in our government relations. The visa waiver program is huge for us. That opens up several other countries to access travel to the United States. I think there are 16 new countries that have been given the rights for multiple entries with no visa requirements. That allows quite a few more visitors. Korean visitors, for example, can come in as many times as they want. As the world economies are readjusting, that’s doing really well. The refocus of air carriers around the world that have seen their business travelers drop have repositioned their aircraft into leisure markets. What used to be known as, “Ooh, that leisure destination with just frequent fliers,” now you have British Airways with its most successful international launch with the October start of Heathrow to Las Vegas. We have XL Airways coming in from Paris to Las Vegas. We have discussions with Spanish carriers looking to come in this summer as well as some from Moscow. It’s ironic that during the peak times in Vegas, we couldn’t get the air service, but now there is a stronger interest. That’s why we’re really bullish because that’s a plus for us.

How do you find customers overseas?

First, we have to sell Vegas as a destination. What we have are key partners and distributors, known as overseas representatives. Their job is to deal with the major travel companies overseas, ensuring that our tours are included or offered as part of that Vegas experience. So when you’re coming to Vegas and you’re choosing to stay in the hotels, one day of your Vegas stay needs to be a chance to experience the seventh wonder of the world. The fact that we do the tours in 16 languages and the fact that we can pick you up from your hotel and bring you right back to your hotel, it allows visitors to stay one extra day in Vegas. So Vegas is turning into the hub-and-spoke system for your national park experience.

You speak seven languages and have a grasp of some of the cultural differences of other nations. What’s the industry’s best target demographic and how do you pursue it?

I’m so privileged to be selling the seventh wonder of the world. So how do you really go wrong to an international visitor who is coming into the United States and just outside of Vegas is a must-do destination on a list? So I’m privileged to be in the position to be able to sell these national parks and providing this unique experience. The other benefit that we have is our domestic visitor, our American visitor. They’re a repeat visitor to Las Vegas. They’ve been here several times. They’ve experienced a lot of what the city has to offer. Now, they want to venture out because they’ve come here so many times to find out what else there is to do. That’s caused the tremendous increase in helicopter traffic with a lot more American visitors coming out to experience these particular tours. Those are the changes. Vegas has something for everybody right now. When you start looking at people wanting to connect back to nature, tie up family outings, getaways. How do we reconnect? If you want to take it one step further on why we’re bullish about what this year is going to bring to our companies is that when Americans don’t travel overseas, they travel to their national parks. What a better way of tying in, “Let’s go to Vegas and we can access the national parks at the same time.”

Do you have partnerships with airlines or other companies that help steer customers your way?

Yes, we do. We’re one of the major providers of sightseeing tours for some of the major online travel companies as well as the airlines such as British Airways, Qantas and Condor and the Lufthansa airlines. We’re very focused on providing those airlines and those wholesalers of those airline partners with their sightseeing products.

Tell us about Best Vegas Attractions. How did that get started and what does it do?

When I was looking at our numbers, what was happening in town, I said, “Wow, we’re having some real challenges.” It was around a year and four months ago. My numbers for November looked absolutely dismal. And I was talking to my colleagues in the hotels, getting their forecasts on how it looked and all the yield managers in town and hoteliers were saying, “There’s not much on the books. It doesn’t look good.” (Average daily room rates) were dropping dramatically. And of course, when you have a fundamental shift with a 25 percent drop in ADRs, it means you’re attracting now a completely different visitor. That affected part of the sightseeing business. And not just sightseeing, but it affected all attractions in Las Vegas. As an opportunity to sit and talk with my colleagues in the attraction business, we started a round-table meeting saying, “I’ll share my numbers and tell you what’s happening if you tell me what’s happening with you guys.” I was totally frank and honest in regard to what numbers we saw drop, what markets, what sectors and what we thought our consumers or our travel accounts were behaving, our booking windows. What was interesting was that sitting at the table was Madame Tussauds — one of the founding members — along with “Bodies,” “Titanic,” the monorail. And we started realizing how much we spend in promoting ourselves, but we never thought about how we could cross-market our visitors together.

It started with a very simple equation: How do I let our visitors coming for our experience know about your attraction and how do you let them know about mine? That started with five or six founding members and here we are now a year later with 20 members involved with this group ranging from Dinner in the Sky to the new “CSI” exhibit that just opened up to ATV adventures. We’re all cross-marketing together. Together, we touch 25,000 consumers a day. The advantages of having down times takes you back to the basics of Marketing 101 principles. Get back into customers’ face with joint-partnership opportunities and really it coined the term you hear in our industry now: “coopetition.” We all started saying, “Oh my gosh, I’m not about to tell you where my business is coming from.” We’re all after those discretionary dollars. But when you look at it for the greater good, the true satisfaction is listening to my colleagues and all of us sitting around in meetings and saying, “Wow, this program is working. While everything is going down, at least we had one thing new to bring to our owners of new cooperations that allowed us to access segments of the market we weren’t touching.” That’s what Best Vegas Attractions did for us.

How does Best Vegas Attractions benefit tourists?

Best Vegas Attractions gives you some of the best deals Vegas has to offer. On the British Airways inaugural flight coming in, Best Vegas Attractions were the primary attractions used in the promotion. You had people experiencing the trips on Papillon, on Scenic Airlines, visiting Madame Tussauds and hopping on the monorail. You get the best value. It’s at your own convenience. You get a special booklet in advance; it’s like a special pass to Vegas. It tells you what are the best activities to do.

How will the completion of the Hoover Dam Bypass affect tourism in Southern Nevada and your operations specifically?

We’re always bringing people down to Boulder City so it’s not like we’re taking them across the dam. I think it’s going to be a plus to visitors who may want to go to the south rim of the Grand Canyon. It will take some of the pressure off Hoover Dam. But we’ve got Hoover Dam visitors and Grand Canyon visitors. To me, it bodes well that you have packages that you can start creating that can offer both. If you’re split on which way you want to go, let me give you a package that’s going to give you that best experience all the way around. I don’t look at the bypass as a negative; it’s a plus. But I do want it to be over with.

I would imagine your tours to Grand Canyon West would benefit.

Yes, they’ll benefit. Also, there’s been tremendous progress on the paving of the road out to Grand Canyon West. So I think we’re going to have an increase in bus traffic to Grand Canyon West, so that’s a positive for us as well.

When you need to get away and become a tourist, where do you go?

The irony is, when I need to get away, I prefer a sun destination. Give me someplace warm, a beach, and remote, if possible. I enjoy playing tourist. The other aspect I enjoy is going on cruises. Because I travel so much for work, I love this concept of unpacking once and you take me to a different place and I don’t have to pack my stuff again. I think that’s a great opportunity for me to be a person on vacation.

So where is that place?

The last vacation I did was a cruise that took me from Ireland across the Atlantic. Not too much to do, but it allowed me to get down the coast of Nova Scotia, so that was spectacular. You know, areas where cell phones don’t work.