Tourism in the Silver State, which was hard hit during the peak of the recession, is improving, experts say.
“I wouldn’t say it’s healthy, I wouldn’t say it’s recovered or robust. All of those would be an over-exaggeration,” said Jeremy Aguero, principal analyst with Applied Analysis, a Las Vegas-based consulting and advisory services company.
As Nevada’s number one industry, tourism brought $46.6 billion into the state last year and supported 427,000 jobs, according to Nevada Commission on Tourism (NCOT) data. It also generated $2.4 billion in state and local tax revenue.
Evidence of Improvement
The total number of visitors to Nevada has increased between December 2009 and December 2010. Southern Nevada experienced a 3.7 percent jump, and Northern Nevada saw a 1.2 percent rise. “Visitor volume is up due to the gradual improvement in the national and global economies,” said Larry Friedman, interim executive director of NCOT, the state organization responsible for promoting and marketing all of Nevada as a tourism and travel destination. Domestically, for example, the national unemployment rate is less than 9 percent. Internationally, for instance, Brazil and Australia’s economies are strong, the latter having increased airlift in the western United States. Additionally, 36 countries participate in the United State’s Visa Waiver Program, meaning their citizens can travel to the U.S. for tourism or business for stays of 90 or fewer days without having to obtain a visa. About 14 percent of visitors to Las Vegas are international, according to the Las Vegas Convention and Visitors Authority’s 2009 Visitor Profile Study.
“While we have seen slight improvements across the country, there is still work to do. The Consumer Confidence Index is showing improvement and moved above 70 for the first time in three years, however, we would like to see it sustain a level above 90 to indicate a healthy economy,” said Rossi Ralenkotter, president and chief executive officer of the Las Vegas Convention and Visitors Authority (LVCVA).
Friedman said he also attributes the greater number of visitors to the marketing efforts of the NCOT, its rural partners, the LVCVA and the Reno-Sparks Convention and Visitors Authority (RSCVA). For example, the RSCVA’s “Far From Expected” campaign targeting Northern California, a market of about 7 million people, has been successful. Between February 2010 and February 2011, the Reno-Tahoe area experienced a 914 percent increase in total visits from Oakland, a 355 percent increase from Southern San Francisco, a 235 percent increase from San Francisco and a 249 percent increase from San Jose, according to the RSCVA. People’s pent-up desire to travel is also driving more visitors to the region, Friedman said.
“Travel is a freedom, a way of life and something we want to do for ourselves with our loved ones and families,” he added.
Along with visitor volume, local economic indicators show Nevada tourism is picking up. In Southern Nevada, the average daily room rates are increasing, gross gaming revenue is showing signs of improvement and traffic into Las Vegas McCarran International Airport is up about 5 percent.
“It’s been a good three years since those indicators were positive,” Aguero said.
Northern Nevada had a slight increase in cash occupied rooms for calendar year 2010. “Travel inquiries from Northern California are up and attendance of non-locals at annual events remains strong,” said Joe Kelley, interim chief executive officer of the RSCVA.
“We’re cautiously optimistic,” he added. “We’re still continuing to look at tourism a little more conservatively until we see some stronger signs of recovery.”
Bumpy Road to Recovery
For the state’s tourism promoters, the overall economy and unemployment rates, specifically in Nevada and California, remain a challenge. Added to that is increasing gas prices, which affect the cost of both air and vehicle travel. Additionally, other locales are competing more heavily with Nevada for tourism, especially for convention and trade show business.
Within this financial environment, the NCOT, LVCVA and RSCVA are all dealing with decreased operating budgets. NCOT, which is funded by 3/8 of 1 percent of the state’s visitor-paid, hotel-motel room tax revenue, experienced a decline of 19.8 percent in its operating budget since its most recent peak in fiscal year 2008-2009, NCOT data shows.
The NCOT ensures it’s spending wisely and taking advantage of opportunities that yield a larger return on investment with fewer dollars spent, Friedman said. Much of its advertising now targets California, Nevada and other neighboring states.
In fiscal year 2008-2009, the LVCVA’s operating budget was $214 million and this fiscal year (2011-2012), it’s $178 million, reflecting a 30 percent drop. Further, Ralenkotter expects the next budget to be flat. Visitor-paid room tax on Clark County hotels and motels funds 80 percent of the LVCVA’s budget. The remaining 20 percent comes from the operation of the Las Vegas Convention Center and the Cashman Center.
“Like everyone else, we’ve had to make budget cuts and tough business decisions,” Ralenkotter said. “We will continue to be fiscally responsible while also aggressively marketing the destination to both leisure and business travelers.”
Similarly, the RSCVA’s 2010-2011 operating budget has decreased about 28 percent since fiscal year 2008-2009, with 2011-2012’s budget expected to be flat. The RSCVA’s funding comes from room taxes, operation of RSCVA-owned and/or operated properties (Reno-Sparks Convention Center, Reno Livestock Events Center, Reno Events Center and the National Bowling Stadium), investment income and marketing revenue (visitor centers/services) and revenue from RSCVA-owned Wildcreek Golf Course.
“The challenge is using those funds you have wisely and prioritizing your needs,” Kelley said. “Our job is to get the job done regardless of the resources we have.”
Because the state doesn’t fund the three major tourism-promoting organizations, its budget deficit and cuts to industries, services and programs likely won’t affect tourism directly, the experts said.
“The governor offered a budget that while it doesn’t solve all of our problems, it significantly protects the burden on our tourism industry and on visitors that come into Las Vegas,” Aguero said. “If anything, the governor’s budget will have a tendency to help tourism overall.”
Other challenges are continuous, Friedman said. They include dialing in on the right marketing messages to attract the proper visitors and determining the best media for those messages. Keeping up with the latest technological developments and trends is another one.
More Nevada visitors are researching travel plans and using travel agencies online. For example, last summer 25 percent of the visitors who traveled across Highway 50 as a result of NCOT’s “Loneliest Road in America” campaign, re-energized from decades ago, had accessed information from NCOT’s web site.
“The Internet is a great technology for revitalizing old campaign strategies,” Friedman said.
Online advertising, which particularly lends itself well to visually showing off Nevada’s varied places and landscapes, is working. Between Dec. 1 and Jan. 2, a 33-day period, 727,000 people who viewed one of NCOT’s online ads went on to visit an online travel agency, the commission’s data show.
“That’s the kind of volume we’re talking about when we talk about online advertising,” Friedman said.
Social media outlets also remain hotbeds for Nevada tourism marketing and advertising efforts. The RSCVA, which hired an in-house social media/public relations director in April 2010, employs Facebook, Twitter, YouTube and Flickr. In a recent three-month period, Facebook followers grew from about 13,000 to 16,000.
“We’re leveraging all the different aspects of social media,” Kelley said.
Along with using social media, the LVCVA operates various web sites to target various travel segments, including visitlasvegas.com, vegasmeansbusiness.com and stayandplayhere.com.
“Any outlet we can take advantage of to put Las Vegas in front of travelers is an asset that we will explore,” Ralenkotter said.
The NCOT uses Google, Twitter and dot mobi sites—nvski.mobi, nvroads.mobi and others—that extend the commission’s marketing campaigns to the mobile phone.
“We’re constantly re-evaluating and taking a look at the pluses and minuses of all social media,” Friedman said.
Another trend Kelley has spotted is fewer people planning trips far in advance and, instead, booking closer to their travel dates.
“We’re seeing people taking shorter trips, maybe staying closer to home and making those decisions in a shorter window,” he added.
A new type of travel consumer is emerging out of the recession, Ralenkotter said. This person is more conscious of maximizing the value of every dollar.
“Value is not necessarily about price though,” he said. “It’s about the experience they have and transparency in what they are spending for that experience.”
Mapping the Road Ahead
From a recently completed market research project to help direct its efforts toward the new, emerging-from-a-recession consumer, the LVCVA has identified three critical target markets: international, convention and business, and special events. The LVCVA continues to evolve the brand of Las Vegas through its “What Happens Here Stays Here” campaign. It will also introduce a new campaign in the spring and develop an additional summer campaign. The sales staff continues to travel to meet with potential clients and travel operators to market the value and advantages of bringing business to Las Vegas.
This year, Las Vegas will host several industry shows, such as the Incentive Travel Exchange, the American Society of Travel Agents, the National Tour Association and the International Association of Exhibitions and Events, through which the LVCVA can showcase the destination directly to people who can bring business and visitors to the region. However, the “pinnacle of the industry shows,” Ralenkotter said, will be the World Travel and Tourism Council’s Annual Summit, taking place in May, which will bring “government travel ministers, Fortune 500 CEOs and the travel industry elite from around the world.”
“The Summit will put Las Vegas on the world stage as these dignitaries gather to discuss and formulate the future of travel and tourism,” he added.
The LVCVA has done an incredible job of growing the meetings and conventions travel market, and not only citywide, Aguero said. Moving forward, continuing to diversify Southern Nevada’s visitors and “fortifying some of the shares from international traffic will be important,” he added.
The RSCVA is currently focused on targeting Northern California and bringing in convention/group business, Kelley said. Building off its “Far From Expected” campaign, it’s driving hard into certain markets like education, science and engineering. Seven months ago, the group hired a new vice-president of sales.
Recently, the organization and several partners launched a “COME SEE. FLY FREE.” campaign, through which meeting planners who meet certain criteria can visit Reno-Tahoe at no expense.
“The results and the leads have been exceptional,” Kelley said.
To better promote the area’s special events, the RSCVA has recently evaluated its printed brochures, new special events brochure, getaway planner and list of 101 Random Things to do in Reno-Tahoe.
The NCOT is currently working toward having a brand developed, one that promotes all of Nevada. A firm will be selected to conduct research then develop a brand, following which, in May, the Board of Examiners will approve the corresponding contract.
“The purpose is to make sure we are maximizing our dollars, not only with where we’re placing our advertising, but also with what our message is,” Friedman said. “It’s very exciting.”
The commission has started working on its spring television and Internet advertising, which will be geared largely toward California and Nevada, Friedman said. It’s working with its international offices on developing cooperative programs with tour operators and is conducting familiarization tours for the media and tour operators.
The organization continues to stay apprised of what’s happening economically in California and of developments in China, Brazil and emerging and traditional markets. It continues to look at what’s happening regarding visa waiver potential and air opportunities into Las Vegas.
In fiscal year 2011-2012, NCOT will award just over $1 million to more than 70 rural organizations to help them advertise and market various tourism venues, events and activities.
“Nevada has a great product, and to be able to promote all of it really is a gift,” Friedman said.