Slump could slow Convention Center bookings in Hawai'i
Bloomberg News Service
LAS VEGAS If any city in the world knows how to hedge its bets, its Las Vegas.
The resort city is capping a decade-long buildup in convention facilities to broaden its base beyond gambling and tourism. By the end of this year, work will finish on a $150 million renovation of the citys downtown Las Vegas Convention Center, doubling its size to 3.2 million square feet.
Including casinos on the Strip, Las Vegas will have 7 million square feet of convention space, almost twice that of Chicago, its nearest competitor as a meeting destination.
The ballrooms and exhibition halls, together with new entertainment options, sunny weather and inexpensive hotel rooms, have dispelled the citys reputation as a gambling-only resort and made it the favorite gathering spot for large groups like Re/Max International and the Sporting Goods Manufacturing Association.
"The gaming industry realized that they had something that many other cities did not have," said Goldman, Sachs & Co. analyst Steven Kent. It has added Broadway shows, new golf courses and outposts of restaurants like New Yorks Aureole and celebrity chef Emeril Lagasses Delmonico that are all "good for the convention market."
The number of conventions in the city jumped 36 percent to 3,847 between 1995 and 1999, according to the Las Vegas Convention and Visitors Authority.
Some analysts said the convention market is just as vulnerable to a slowing economy as gambling, which still accounts for three quarters of the citys visitors. With signs now that gambling revenue is falling, cracks may begin to show.
"Its fair to say if there is an economic slowdown, then business travel and convention attendance could be affected," said UBS Warburg analyst Robin Farley.
The convention crowd is especially good for nongambling activities, the Visitors Authority said. Business travelers on expense accounts spend $961 per visit on food and entertainment, about 50 percent more than tourists.
MGM Mirage Inc. in 1995 spent $30 million building a theater at its MGM Grand hotel on the Strip, and an additional $45 million producing its show. New resort casinos such as the Bellagio, Paris and Venetian have added extras like indoor shopping malls next to their gaming space.
While Las Vegas Convention Center was built in 1959, the citys image as a top conference market didnt take off until 1989 with construction of the Mirage casino, which has about 73,000 square feet of meeting space.
The MGM Grand casino, with a ballroom that seats up to 3,850 people, hosts more than 1,000 events a year. Convention-goers account for about 20 percent of revenue and hotel occupancy, up from about 10 percent two years ago, said Chuck Bowling, senior vice president of sales and marketing.
When the Re/Max International real estate brokerage company meets in Las Vegas, rather than San Diego or Orlando, Fla., attendance jumps about 30 percent, said Mike Reagan, vice president of conventions at Re/Max. MGM Grands arena and its 5,000 rooms lets 7,000 Re/Max brokers network without being shuttled to different locations, he said.
"That City of Entertainment phrase they use to us its really the city of conventions," said Reagan. "It becomes a little Re/Max city for a few days and its a blast."
John Riddle, president of the Sporting Goods Manufacturers Association, said his group moved its 60,000-delegate Super Show convention to Las Vegas from Atlanta where "we were using a parking lot to build temporary structures."
Just how solid a hedge the convention business provides for the casinos and the city could soon be tested. Nevadas Gaming Control Board said gaming revenue fell 7.7 percent at Strip casinos in November from a year earlier, after rising 2.7 percent in October showing visitation to Las Vegas may be slowing.
[back to top]