Feature Stories - April 2004

Tourism Checkup

Has Nevada Really Rebounded?

by Sharon Rorman Sheldon

The economic downturn experienced in Nevada following the Sept. 11, 2001
terrorist attacks was unique to the state’s history. The dramatic drop in hotel occupancy levels, employment and airport traffic stunned the state. Statistics for economic indicators since that date reveal a resiliency typical of the Old West. Even more persuasive is the new growth and confidence demonstrated by Nevada’s business community.

Southern Nevada Prospects Strong

Las Vegas, currently with 130,400 hotel rooms, will add about 8,000 new rooms
within the next two years. Wynn Las Vegas, with 2,701 rooms, will be the next major casino to open, in March 2005. The Venetian, Mandalay Bay, Caesars Palace, MGM
MIRAGE and the Bellagio are all moving forward with extensive expansion plans. "Investments in these new properties shows great confidence in the industry," said Rob Powers, vice president of public relations for the Las Vegas Convention and Visitors Authority (LVCVA). "Las Vegas is making a strong return to pre-Sept.-11 conditions and is back to normal in terms of visitor volume."

The number of visitors to Nevada plummeted by more than 4 percent in January 2002 compared to January 2001, drawing 158,276 fewer people to the state that month. Airport volume dipped by 10.4 percent and gross gaming revenue plunged by nearly 15 percent. However, the first year after the national tragedy showed a strong rebound, ending the year with a total loss to gaming revenue of only 0.3 percent and an annual visitor volume loss of 1.0 percent. Furthermore, a strong convention market drove tourism indicators sharply higher from Sept. 2002 to Dec. 2002.

In fact, the convention, business meeting and trade show industry barely wavered in the year following Sept. 11. Except for the mid-summer months and December, convention attendance showed significant growth throughout 2002.

Manny Cortez, president and chief executive officer of the LVCVA, reaffirmed the importance of the convention industry at the annual Preview Las Vegas 2004 event, saying his organization will continue to target convention business in its marketing campaigns.

Overall, prospects for the future are strong. "Last year ended with an estimated 35.5 million visitors in Las Vegas, up 1.3 percent over 2002," Powers said, although visitor volume still did not attain the year 2000 record level of 35,849,691. Dr. R. Keith Schwer, director of the Center for Business and Economic Research at UNLV, projects an increase in visitor volume to more than 36 million in 2004. "By 2005, we expect growth to accelerate to 3.2 percent as rooms are added to the market," he said. "That will bring visitor volume to 37,333,948."

Reno: Arts and Adventure Attractions

While the number of first-time visitors to Reno dropped sharply in 2002, according to a survey sponsored by the Reno-Sparks Convention and Visitors
Authority (RSCVA), it shot back up in 2003 and visitor count has remained fairly stable.
Reno’s new slogan, "America’s Adventure Place," is intended to establish a more energetic image and attract a younger tourist base. An "arts and adventure" area beckons visitors near the downtown casino district, with art galleries, restaurants and a new brewery all within an easy walk from hotels.

The Truckee River has been made more accessible and exciting with the opening of Nevada’s first white-water park. Located in the heart of the downtown resort area and open year-round for kayaks, canoes, rafts and inner tubes, the Truckee River White Water Park at Wingfield features five drop pools in the north channel and six in the south channel for kayaking maneuvers. Even if you’d rather not get wet, you can enjoy watching from the bank on smooth flat-top rocks and boulders, which were added for easy public access. A nearby grassy park provides an amphitheater and facilities for concerts, festivals, picnics, outdoor sports and recreation.

Other recent downtown redevelopment projects include: The Riverside Artist
Lofts, which are now fully occupied; the Siena Hotel Spa & Casino, which opened in
July 2001; Harrah’s Plaza, adjacent to the famous Reno Arch, providing a venue
for music, sporting events and relaxation; the Riverfront Trail Improvements project underway to enhance riverfront trails along the Truckee River; and the West Street Plaza, located in the middle of the Downtown Arts and Culture District adjacent to the Wingfield Park Amphitheater.

The International Market

But while domestic tourism is up, the international market is still depressed from pre-Sept.-11 levels. According to the Nevada Commission on Tourism, Japan was the No. 1 market for international travel. For the year ending 2001, for example, more than 282,000 Japanese visitors came to Nevada. In 2002, the number dropped by nearly 32 percent to 192,000 visitors. In contrast, visitor volume from the United Kingdom actually increased (242,000 in 2001 and 290,000 in 2002) and the UK consistently provides the greatest number of overseas visitors.

International Visitors

Source: Nevada Commission on Tourism

Of course, other factors, such as the exchange rate of the U.S. dollar and particularly the war in Iraq, have had an adverse effect on international travel. However, the big picture for tourism in Nevada looks good, according to Powers. "International travel is a huge market. In recent months it has increased, and there is great growth potential. All things considered, we have recovered to a great degree," he said. "It will probably be 2006 before we reach pre-Sept.-11 levels."

While some areas are not fully recovered, such as international travel and average spending levels, agencies in Nevada are working hard to regain ground. LVCVA is opening a new office in Mexico and has hired a firm to represent it in Germany, Australia, France and Japan. Likewise, the Nevada Commission on Tourism has stretched its reach beyond our borders to aggressively promote the state.

Other Economic Gauges

Gaming revenues continue to climb. After ending 2001 with total earnings of $7.6 billion, gaming income dropped by $6 million in 2002, and was up to $7.8 billion in 2003, a gain of 2.6 percent over the previous year.

Air traffic is often considered one gauge of economic stability for a state that depends on its tourism industry. McCarran International Airport reported an all-time high of 36.8 million passengers in 2000, which dropped to 35.2 million in 2001 and to 35 million in 2002. Airport traffic increased slightly in 2003 to 36.3 million passengers.

Current positive indicators include more carriers and flights being added to the runway lineup. Jet Blue started service after Sept.11. Furthermore, United Airlines’ low-fare carrier, Ted, as well as Philippine Airlines, both began service this spring. Southwest Airlines added 21 weekly flights to its already full schedule, and both Delta’s Song Airlines and Virgin Atlantic increased the number of flights into Las Vegas.

Advertising Nevada

The Sept. 11 slump prompted several new marketing campaigns, from the controversial, "What Happens In Nevada Stays in Nevada" by the LVCVA, to the latest
trend of emphasizing the considerable outdoor features of our state. "We want to
get people to venture out beyond the city lights and take advantage of other activities in Nevada," said Chris Chrystal of the Nevada Commission on Tourism.

The commission launched a $500,000 national advertising campaign called, "Wide Open," this past February to urge visitors to try activities like skiing, mountain biking and kayaking in addition to the traditional gaming and entertainment draws. The 30-second television spots invite viewers to request the Adventure Guide publication by phone or on the Nevada Commission on Tourism’s Web site, www.travelnevada.com. "Our challenge is to inform people about how to gain a well-rounded experience in Nevada," Chrystal said. "It’s imperative that we be diversified."

Elko Promotes Adventures

Elko, located in a region of the Silver State that depends on the mining industry, was struck not only by Sept. 11, but by declining gold prices – "a double whammy," said Ralph McMullen, executive director of the Elko Convention and Visitors Authority. "We knew we had to do something after Sept. 11," he said. So they created the "Adventures On the Edge" marketing campaign. "We have one of the most aggressive campaigns to promote outdoor adventure activities in Nevada," McMullen said.

Using tactics including national radio and newspaper advertising, billboards, displays at tourism and travel shows, exposure in Readers Digest magazine and even a
national media tour in the middle of the winter, Elko has drawn attention to outdoor recreation opportunities in Nevada. "A large percentage of the land in this area is controlled by the Bureau of Land Management and the U.S. Forest Service," McMullen said. So in the summer Elko promotes hiking, horseback riding, fishing, camping and four-wheeling. When the snow flies, the campaign turns to skiing, ice fishing, snowmobiling and helicopter skiing. "We want people to know that we offer access to wildlife, sports and historical attractions, scenic wonders and the freedom to enjoy the wide-open spaces," he said. "Out here, if you want to, you can go hundreds of miles and not see another human."

Fortunately, the price of gold is back up and the mining industry is stabilizing. Efforts to promote tourism are paying off, too. Average room-tax collection for 2003 is up 11.9 percent over 2002. "We also see an increase in attendance at major events, such as the Balloon Festival, Basque Festival, Cowboy Poetry and motorcycle jamboree over previous years," McMullen said. "We expect to become one of the greatest year-round outdoor areas in the country."

Recovery Seen Ahead

It’s all designed to attract more visitors and their money to Nevada. "Las Vegas has led Nevada in rebounding from Sept. 11 more quickly than other states or destinations," said Lt. Gov. Lorraine T. Hunt, who serves as chair of the Nevada Commission on Tourism and chair of the Nevada Commission for Economic Development. "Through quick, reactive marketing and a world-class infrastructure, we have come back a long way. We still have more work to do, of course, to reach parity and then surpass our previous visitor volume."

Nevada’s business community has enjoyed recovery with job growth that continues to outpace other states. Even with significant and steady population increases, the state’s employment level rose 4 percent over the past year. Nationally, over the same period, employment declined 0.1 percent. According to Myla Florence, director of the Nevada Department of Employment Training and Rehabilitation, "We lost 11,000 jobs as a direct result of Sept. 11. Fortunately, though, we have had job growth in the areas of construction, retail and education."

It’s true that, after Sept. 11, travel and tourism suffered from an economic slowdown, both nationally and internationally, as well as heightened concerns for travel safety. But the real test of recovery is an intangible that cannot be surveyed or measured. It’s a sense of optimism shared by those who live in this wonderful state…we’re back.

Sharon Rorman Sheldon
Sharon Rorman Sheldon is a principal of Aztec Communication, specializing in public relations and professional business services.