TW executive roundtable probes state of the industry

Hoping to take the pulse of the Las Vegas leisure market, Travel Weekly gathered airline, tour operator, gaming, resort and tourism board executives at a roundtable luncheon with Editor in Chief Arnie Weissmann and Publisher Bob Sullivan at the Golden Nugget in downtown Vegas last month, on the occasion of the fourth annual Travel Weekly Las Vegas Leadership Forum.

Moderated by Travel Weekly Destinations Editor Kenneth Kiesnoski, roundtable participants addressed hot-button issues such as growing demand for luxury products; booming condominium construction; airport and road congestion; and competition between the Strip, downtown and outlying resorts in the Las Vegas area.

(Editor's note: The original transcript has been edited for length and flow.)

Travel Weekly: September marks five years since the benchmark event of 9/11. What's the state of Las Vegas half a decade after that seminal moment? Is Vegas back on track?

Terry Jicinsky, senior vice president, marketing, Las Vegas Convention and Visitors Authority: We're more than back on track. Visitor counts have rebounded, hotel occupancy is ... about 90% ... and we're seeing huge investments ... in terms of not only new properties and projects ... but also continued re-invention, adding new restaurants, shows and entertainment. We couldn't be better positioned; 9/11 is behind us.

However, I'm not sure the recovery was as quick on the international market as it was on the domestic front. From a marketing and branding standpoint ... we probably put fewer resources in the international markets over the last five years than we would have if 9/11 did not happen.

TW: Has this year's fuel crisis been a factor at all for inbound tourism to Las Vegas?

Dan Stark, vice president, corporate marketing, Boyd Gaming: Some locals properties have probably seen a little impact, but I don't know if it's fuel as much as it's road construction between here and Los Angeles. Interstate 15 has been in perpetual disruption with construction projects on the California side of the highway. That's going to have a serious effect on our ... drive-in business.

I would say, though, that our fly-in business continues to be strong. Our Hawaiian business remains fairly strong, and Allegiant Air has created an opportunity in some of the second- and third-tier cities they serve. They feed a lot into Las Vegas. They're a low-fare airline, privately held, and they're actually making money.

Baron Ah Moo, vice president, hotel operations, Golden Nugget Las Vegas: We've seen a change in booking patterns; the window is a lot shorter. I'm not sure if it's gasoline prices. But it seems people tend to postpone even further now because gas prices are changing dramatically over the course of time. Normally, it's a seven- to 10-day window. It's now three to five days.

Fletch Brunelle, senior vice president, hotel sales, marketing and distribution, MGM Mirage: It hasn't necessarily had an impact on long-term travel. Seasonally, I agree things have shortened up somewhat in the summer, but it's not unlike any other summer.

It's not as it was with 9/11; booking windows were ridiculous at that point because you were trying to get anything you could last-minute. From our perspective, there's nothing unusual this season.

TW: Does the booking window for Vegas differ from other destinations for tour operators?

Travis Christ, vice president for sales and marketing, US Airways: Yes, we find that Vegas is a bit shorter, but it's not what it was right after 9/11. But it's a bit closer than we find for the Caribbean or Hawaii.  On the fuel side, yes, fuel has something of an impact on an airline. On one hand, it's surprisingly not as big a problem as we expected, and that's because fares have gone up. Demand is quite robust nationwide right now, and Las Vegas is no exception. 

In Vegas, we now have as many flights as we've ever had; we've recovered unquestionably from 9/11. We have cities where we'd like to add nonstop service to Vegas, and we can't because we don't have any more [airport] real estate and we have reached the point of being gate-constrained. The airport is working really hard on it. But it's a high-class problem to have.

TW: When you talk about running out of gates, are you including slots you inherited in the merger with America West?

Christ: US Airways was obviously quite small in Las Vegas. As this combined entity, we are tapped out on gate space.

TW: What, if anything, can the LVCVA do about airport capacity in Vegas?

Jicinsky: The airport is aware of the issue and is in the process of responding. They just opened the third set of D gates in Terminal 1, and they're working on the fourth. They've also started Terminal 3, which will add another nine to 13 gates. It's a combination of not only gate space but a timing issue of when it all comes on line.

In the long term, they also are moving very quickly on the second airport, which is to be located [at Ivanpah] about 25 miles south of Las Vegas on Interstate 15.

Christ: From US Airways' perspective, McCarran is arguably the best-run airport in the country, and they are absolutely aware of the issues. They've been very creative. We could have tapped out a long time ago if it wasn't for their creativity.

Kirsten Dimond, vice president, hotel operations, the Venetian: A few months ago, the Venetian launched "speed check-in" for guests. McCarran Airport approached us to assist them in handling how to process the guests passing through. I think we have all been at the D gates, where there are long lines for security when, for example, big shows are breaking up and it's a major departure day.

The airport is reaching out to the hotel community. We're working on processing [outbound] luggage at the hotel; therefore, guests can enjoy our facilities longer and go the airport just an hour before a flight. Right now, we only have one airline on board, but I believe there will be one more hotel participating soon.

TW: Does airport congestion impact your development plans? Can you provide a quality vacation experience if you add a lot more rooms into your group?

Stark: Boyd Gaming and MGM Mirage have made huge commitments to the future with Echelon Place and Project CityCenter. We're going to add 5,300 rooms in four hotels. We wouldn't be doing that if we didn't think the rest of the infrastructure could keep up.

However, I will say that we're getting to a point where, with the price of fuel and road disruptions, we need to start thinking about rail service and alternative modes of transportation.

TW: A Sun Belt city, Las Vegas is car-dependent and often choked with traffic. However, you do have a new monorail. Is public transit the way to address congestion?

Jicinsky: It's a combination. It's working with the Taxicab Authority to make sure there's enough taxi medallions out there. It's working with the monorail to make sure it is running efficiently and effectively ... and whether there's an expansion program. And it's working with limo companies as an alternative form of transport. 

Brunelle: In terms of MGM Mirage's vision, we're going to have monorail transportation between the Mirage, Project CityCenter and the Monte Carlo, and we're looking at extending that to New York-New York. So it's also individual companies looking at how they can connect their resorts, even if it's not the public sector with the monorail.

TW: Do visitors complain about the impact of congestion on the Vegas experience?

Stark: The old attitude was that if [guests] leave casinos for more than a half-hour it better be just to get a hot dog. They didn't want them moving around. Traffic congestion is an issue, but I think people understand that when you go to a place where everybody wants to be, it's crowded.

TW: So it's not at a point where people would avoid Vegas because of the crowds?

Ken Pomerantz, president and chief marketing officer, MLT Vacations: We do hear from our customers that the hassle factor is increasing. Taxi lines, trying to get into restaurants and getting up and down to the Strip can be quite timely -- or untimely. 

I don't know that everybody is expecting that to be part of their experience. The lines! It can take you 10 minutes to get to your room from the lobby. So we hear complaints from some of our customers.

Ah Moo: It's the cumulative effect of the entire stay and experience. By the time visitors get to their hotel and stand in yet another line, that's the breaking point. We need to expedite the experience and distract them from the fact they are waiting, giving them something to do in that period that enhances the guest experience.

Pomerantz: I think the expectations of customers have changed as product has improved and prices have increased. If you're paying a couple of hundred dollars for an air seat and a couple of nights at a hotel, you may be willing to put up with a little bit more hassle. But if you're paying several hundred dollars more, you're less willing to put up with what you consider substandard service.

Dimond: At the Venetian obviously we have a different market segment with the conventions at the Sands Expo. If taxi lines or transportation times are a challenge to the leisure traveler, it also is an issue for show organizers. We hear a lot of complaints about that. But we're working on different alternatives. We now have shuttle buses from the Expo to two or three different hotels. It is an issue, and it's more organizers of conventions than individual attendees that are raising it.

Stark: When you look at how Vegas stacks up to other convention cities like New York, we're very competitive. Because this is a tourism-dependent economy, the LVCVA has been careful about watching the infrastructure.

TW: Las Vegas looks like a forest of construction cranes. Given constraints on resources due to a desert setting, is there an overarching master plan for growth?

Jicinsky: There certainly are challenges with our growth, but there is a countywide master plan. We do have what we call a "gaming red light district," which states a plan for where new casinos can be built and how big those casinos can be. That said, we are a community of five different municipalities, and each has nuances related to its master plan.

TW: Do the Strip, downtown and outlying resorts such as Lake Las Vegas comprise one destination or are they starting to compete?

Jicinsky: More than our becoming competitors with each other, we'll become more successful at tapping into market segments we were never able to before. So, as Lake Las Vegas and Summerland Resorts continue to grow, we'll become more competitive with Phoenix and Palm Springs [Calif.]. I don't think we're going to cannibalize ourselves. We're reinventing and providing product to market segments we didn't reach before.

Brunelle: You have competition between properties within the same company because they were built to compete with each other. What competition does is make sure we continue to reinvent and reinvest. It's not necessarily about a master plan, it's taking a look and it's asking what customers want.

Pomerantz: From the operator perspective, there is an opportunity to do some things that are different with downtown and outlying areas. As we go and sell Lake Las Vegas in the Midwest, it competes against Palm Springs and Scottsdale [Ariz.], better than the Strip does. So we're excited to see efforts promoting those destinations because it will generate more demand from people who wouldn't be attracted to the Strip.

Stark: At one time, the old nine-story east tower of the Stardust was the tallest building in Las Vegas. We are now talking about doing 40- and 50-story condos. The next shoe to drop will be the condos and how they affect us.

Ah Moo: We're dependent on the condo boom here in downtown because a lot of the proposed buildings will be going up around us. We've taken the ball and run with it by spending $250 million here over the next two years, renovating the property and bringing it back up to status. The Golden Nugget itself is an institution, but we're hoping to lead a [wider] revitalization downtown. We're trying to develop a destination property to bring people downtown, to allow it to compete with the Strip.

TW: When people hear condo, they think luxury. Is that where the growth is? Will Vegas still offer affordable, midmarket vacations?

Brunelle: In terms of the affordable Las Vegas, there will always be that component. You're looking at a $500,000 investment, minimum, for someone to purchase a condominium on the MGM Grand campus. Many want to buy a condo as an investment so that they can enter it into a rental pool. So basically it becomes an extension of the MGM Grand.

You're able to come into a non-gaming, residential environment, but it's connected by walkway directly to the MGM Grand so you can experience all [resort] components. We see a great opportunity to expand Vegas' reach at that luxury end. We're also going to have a residential program at Project CityCenter. The last numbers I saw were for a 2,000-unit property to sit between the casino at Project CityCenter and the Bellagio.

Jicinsky: While I agree that luxury is one of the fastest-growing segments, it still is a segment. We have 10,000 rooms downtown in a specific market category. We have 15,000 rooms in the motel category. As a piece of the pie, they may become smaller, but it's still is a percentage. About 70% of all hotel rooms are on the Strip, but the flip side of that is that 30% are in other areas. We're confident we'll continue to have something for everyone.

TW: Are operators finding the emphasis on luxury is having an impact on business?

Pomerantz: In our business we love the luxury segment. But I do have some concerns that we're not going to have an affordable product for first-time or more budget-conscious visitors.

There may be a lot of motels in town, but I don't know that if you're sitting in Peoria you're going to find a 30-room motel off the Strip to be an acceptable option vs. other destinations.

Brunelle: Let's keep in mind that Excalibur and Circus Circus are still here.

Pomerantz: But the Riviera and the Stardust might not be. A lot of things are happening that are specifically taking that category of rooms out of the market.

Brunelle: If the consumer is someplace else, we'll adjust our marketing as we have in the past. It depends upon where consumers want to go. And they vote with their feet.

TW: Are visitors now coming to Las Vegas more for the shows, dining and attractions -- or business -- than for resort gaming?

Brunelle: For the first time in history, more than 50% of revenue is from nongaming [activities]. If you look at resorts like a Bellagio or a Wynn, 60% to 65% is nongaming revenue. Some properties can be more dependent upon gaming and some less. Depending on your market, you either need it or you don't -- you decide.

Dimond: In 1996, Las Vegas was 15th in the U.S. for trade shows. We are, since last year, No. 1. We have 38 of the top trade shows in the U.S. Other cities cannot provide what we can provide.

Stark: It's repositioning everybody's attitude, whereas before it was primarily driven by gaming. Businesspeople understand that Las Vegas is an entertainment experience that encompasses not only gaming but also shows and other recreational opportunities such as golf or going out to Lake Powell and Valley of Fire State Park.

TW: Are families still coming? Or is Las Vegas once again all about adult escapism?

Pomerantz: The beauty of Vegas is it appeals to almost every market segment. There are resorts with pools and beaches that do attract families. And the corporate meetings and trade show markets are here as well as bachelor parties and destination weddings. Las Vegas benefits hugely from geography: You can travel here and be in your hotel within four-and-a-half hours from anywhere in the U.S. You can't do that in San Francisco or Atlantic City.

TW: There's a trend toward direct sales, particularly via the Internet, instead of using industry intermediaries. Do you still see travel agents as part of your future?

Brunelle: Operators such as US Airways Vacations and MLT Vacations help us extend our marketing reach. The travel agent is still an important part of the business. We continue to educate agents about our resorts; they are an important distribution channel. We've tried to "right-size," based on the way the consumer wants to purchase. If consumers decide they want to purchase a particular way, we're going to make sure we have enough inventory in that channel.

TW: The average age of the Vegas visitor has dropped. Is there a connection to the move toward online booking?

Jicinsky: Over the last five years, the average demographic age has gone down a little bit. The Generation X group now has Las Vegas on their radar screens, and we're seeing significant growth in that 30-something age range. At the same time, baby boomers are reaching retirement, so we see a huge growth in that segment, as well. The two are working in tandem.

Pomerantz: To tie those issues together, we're focused around the travel agent, and we're doing training for agents about Vegas for the 30-and-under crowd: what to do and how to sell it to their customers.

TW: Have Vegas hotel properties had to tailor product to fit boomer or Gen X tastes?

Brunelle: There are things that have been added that cater specifically to those crowds. Depending on the property, you make the conscious decision to go after the particular segment. All of our resorts have something for a particular generation, but it's not necessarily that we're targeting [one group].

TW: But wasn't rebranding Treasure Island as TI an attempt to completely reposition that property towards the younger set?

Brunelle: It was. It was also to communicate that the family element had been removed completely. The name Treasure Island was something that conjured the movie, the book. We want to make sure that we have a better blend of folks -- and folks that aren't bringing children -- because it's not a place to go and have a family vacation, per se.

Ah Moo: We identified our customers being baby boomers. We'd like to be all things to all people, but our gaming profile lines us up with being slightly older. So we have looked at, through renovations, what would attract those customers yet have universal appeal. There needs to be an alternative to the Strip in terms of the experience customers have. We are positioning ourselves, as an alternative for people who want to come in and throw money into the slot machine.

Stark: With the upgrade of the Fremont Street Experience, it's now an incredible show downtown. We're hopeful the monorail will get extended downtown. In the interim, the Deuce [bus] is helping. In the summer, I am surprised to see people packed in those buses like sardines, going up and down the Strip.

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For more details on this article, see "TW Leadership Forum takes the pulse of Las Vegas."

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