Vegas Fights Perception Of Excess

Already pummeled by significant reductions in air service, deteriorating travel demand and high-profile meetings cancellations, Las Vegas is being further harmed by perceptions of excess, putting more pressure on the city's attempts to lure business meetings and conventions.

While the perception of Las Vegas as a destination for frivolous spending rather than serious business meetings recently has been invoked by politicians, including President Barack Obama, when railing against corporate excess, travel associations and Las Vegas tourism officials are trying to fight that assessment.

Roger Dow, president and CEO of the U.S. Travel Association, last month during The Masters Program in Washington, D.C., noted occupancy declines in the city. Dow told attendees that "Las Vegas is on its knees," and it doesn't appear the city's travel and tourism industry will be back on its feet any time soon, as demand is expected to slip further, new supply is scheduled and hoteliers are having a difficult time pushing through any rate increases.

The Las Vegas Convention and Visitors Authority estimated losing 30,000 room nights in January due to the cancellation of business meetings, including those from Wells Fargo and Goldman Sachs, companies that have received federal Troubled Asset Relief Program funds. The cancellations represented a $20 million loss to the city.

"Already you're seeing vast cancellations of meetings," said Jake Fuller, a former analyst for Thomas Weisel Partners, during The Masters Program. "Even for meetings that aren't cancelled, the attendance is going down. It's hard to go back to your boss and explain why you're going to Vegas. Whether that's right or wrong, it's absolutely happening on a day-to-day basis."

Las Vegas Convention and Visitors Authority president and CEO Rossi Ralenkotter in a statement last month said, "The perception that Las Vegas is merely a gaming and leisure destination is antiquated and uneducated. The meeting facilities in Las Vegas are among the best in the world, and the resorts represent major international companies, many of which are publicly traded on Wall Street."

The city has launched an advertising campaign to stress its credentials as a place for serious business meetings.

Fuller said the supply and demand balance in the city already has brought hotel pricing down significantly.

"Room rates in Las Vegas already are down something like 25 to 30 percent. Looking over the back part of the year, you've got to believe rates are going to be down even worse than that," Fuller said, noting new supply coming on board this year faces deteriorated demand. "If demand is down and supply is up, then that's not such a good equation."

According to the Las Vegas Convention and Visitors Authority's most recent construction bulletin, updated in October 2008, the city is expecting more than 20 properties to open this year, representing nearly 14,000 additional rooms.

Las Vegas in the fourth quarter of 2008 was among the hardest-hit cities for air travel, as capacity at McCarran International Airport declined by more than 14 percent, compared with the same period in 2007, according to OAG capacity data.