Feature Stories - June 2005

Nevada’s Door “Wide Open”

Tourism Picture Bright

by Sharon Rorman Sheldon

No doubt about it, visitor volume is up. Nevada topped 50.5 million visitors in 2004, an all-time record – and they all brought money. Tourism is Nevada’s No. 1 industry, contributing more than $40 billion to the state’s economy, including $10 billion in gross gaming revenue.

"A gradual climb" is probably the best way to describe post 9/11 tourism in Nevada. With a few ups and downs, Nevada has experienced steady growth, with every indication of continued expansion. In 2000, the annual average room occupancy rate in Las Vegas was 89.1 percent, but after the terrorist attacks, that average dipped to 84 percent for 2002. It had risen to 88.6 percent by the end of 2004, and the February 2005 rate of 89.7 percent demonstrated that occupancy had finally overcome the twin crises of terrorism and a national economic downturn.

The reasons tourists visit Nevada are different, but connected. Convention visitors, for example, may spend several days inside one of Las Vegas’ huge convention centers, then stay the weekend for shopping and the nightlife; mom-and-pop leisure travelers will take in the neon sights, but might spend a day or two at Red Rock Canyon or Lake Tahoe; the majority of Asian travelers come for business reasons, but spend a lot of time and money shopping for American products; outdoor enthusiasts traveling to Northern Nevada for skiing, hiking, camping and water sports also attend stage shows in Reno; nearly every international visitor who goes to the Grand Canyon comes through Las Vegas; and of course, nearly everyone does a little gambling along the way.

The U.S. Commerce Department ranks Nevada the fifth most-visited state for overseas visitors and the Travel Industry of America reports Nevada is No. 6 in domestic and international visitor spending.

International Impacts

The Asian market has tremendous impact on the international tourism industry, and Nevada is fast becoming a major force in that arena. Although it is the slowest visitor sector to recover after 9/11, positives such as good air service and the strength of the dollar has brought back the vital Japanese tourism market, with Japanese visitors to the United States up 40 percent in 2004 over 2003.

Last June, a milestone event linked Nevada to a nation with the largest population on the planet. Nevada established a tourism office in China, the only U.S. tourism entity to have such an office licensed by the Chinese government. That means no other state in the U.S. is allowed to advertise its tourism products in China, a privilege usually reserved for countries. The office in Beijing will enable Nevada to work directly with Chinese government agencies, airlines, tour operators and other businesses to develop tourism between the People’s Republic of China and Nevada. "Our tourism office in China will open doors for Nevada in the country with the world’s fastest-growing economy," said Nevada Commission on Tourism Executive Director Bruce Bommarito.

The potential for economic impact is enormous. Chinese officials estimate that China has between 100 million and 300 million people who can afford to travel internationally. And when they travel they spend freely. On average, Chinese travelers who visit the United States spend $5,200 per trip. And that doesn’t include the cost of the flight. By comparison, the average domestic visitor to Las Vegas will drop only about $450 per trip.

Nevada’s representatives worked hard to open a tourism office in Beijing. "We believe tourism between the United States and China is important economically and we need a continual presence there," Bommarito said.

Nevada is a popular choice among Chinese travelers. According to China’s tourism officials, more than 93 percent of the approximately 280,000 Chinese who traveled to the United States in 2004 came to Nevada. Las Vegas is the No. 1 choice of cities to visit, followed by New York City.

Nevada’s China tourism office is focused on establishing direct air service between China and Nevada, and also on finding ways to make it easier for legitimate Chinese tourists to obtain U.S. visas. "Good air service instantly increases your market share," Bommarito explained. Most of China’s U.S. visitors currently arrive through Los Angeles, San Francisco or Seattle. "Direct air service between China and Nevada will bring in visitors and establish our state as a western gateway to the United States."

The Nevada Commission on Tourism also operates offices in South Korea, the United Kingdom, Japan and most recently, Mexico. These offices are shared with the Las Vegas Convention and Visitors Authority (LVCVA) and serve to increase visitor volume to the Silver State.

What Happens in Vegas…

Las Vegas is globally seen as the epicenter of excitement. You can’t go to a movie theater or watch TV without seeing something about Las Vegas. It’s all working to Nevada’s economic benefit. Las Vegas had a record 37.4 million visitors last year, according to UNLV’s Center for Business and Economic Research. By comparison, visitor volume was nearly 36 million in 2000 and dropped to 35 million in 2001 and 2002.

The current marketing focus is on world-class dining, high-end retail, a great hotel experience, more guest features such as spas, and attractions for both the leisure and convention traveler. "Every indicator is strong," said Rob Powers, spokesperson for the LVCVA. "Visitor volume and visitor spending are up and our destination resorts are so imaginative and have so much to offer, the drawing power is irresistible."

Powers said the Las Vegas Monorail is a valuable benefit to the area. "It’s a terrific amenity for our customers," he said. Which is why LVCVA included a connector to a monorail station as part of the Las Vegas Convention Center’s $400 million construction project, which will be spread over the next few years. The project will concentrate on updating facilities, adding new meeting space and building a police substation on the resort corridor.

"Wynn Las Vegas will provide a huge gain for all of Las Vegas," Powers said. "Major resorts have a drawing power. Whenever a new property opens, tourists plan a trip to see the new resort, and as a result, other properties also benefit."

Convention Growth

An obvious change over the past several years in the convention industry is the increase in space available to host meetings. "The expanded space, along with effective Las Vegas marketing, has been a great combination for organizers who want their events held in Southern Nevada," said Jeff Quade, executive vice president of sales for GES.

As the largest provider of convention services in Nevada, GES has 500 employees – more than a third of its nationwide staff – working out of Reno and Las Vegas. GES built its national headquarters in Las Vegas, along with a 900,000-square-foot facility to support the hospitality/convention industry.

Quade said the major convention centers in Las Vegas are so comprehensive that any one of them is larger than the combined facilities in many cities. "Mandalay Bay’s convention facilities alone are bigger than all the convention facilities in Phoenix, Albuquerque and Tucson together," he said. In addition to Mandalay Bay, the Sands Expo Center and the Las Vegas Convention Center are mega-sized facilities.

Who fills up these convention centers? "There are basically three categories of conventions," Quade said. "Events that have struggled since 9/11 have found that relocating to Las Vegas has helped them combat low attendance numbers and helped stabilize their meetings. Other events that have traditionally met here have also grown. We are blessed with many events that come here every year and make Las Vegas their home."

Convention attendance numbers continue to be strong for the well-known mega-shows, like the Consumer Electronics Show, MAGIC and the National Association of Broadcasters. LVCVA recently signed a long-term agreement with the National Association of Home Builders to meet in Las Vegas eight times through 2020. "This is a major commitment," Powers said. "We expect 100,000 people each year with this convention, representing $1.2 billion over the 15-year period."

Another major trend Quade sees on the horizon accounts for another growing sub-market and Quade’s third convention category: corporate meetings. "There are a significant number of corporate events," he said. "Companies hosting proprietary trade shows, a product launch to other businesses, or face-to-face marketing within their own industry." These are shows to which the general consumer is not invited. For example, NAPA Auto Parts is hosting a meeting as a one-on-one marketing medium to communicate what is going on in its company. Additionally, Quade said more corporate meetings are moving toward education for employees and customers.

The convention industry is still driven by the surrounding amenities, such as hotel rooms, nightlife, gaming, restaurants, high-end shopping and convenient visitor services. It all works together. "We are thankful for the level of teamwork in the hospitality community," Quade said. "It’s a great mixture."

Northern Nevada

For conventions and meetings, Reno does a great job in the northwest market in competition with San Francisco, Seattle, Portland and Boise. It’s a natural location for environmentally conscious groups like the North American Wild Sheep Organization and the International Safari Show. The $28.5 million Reno Events Center, which opened in January 2005, is a 118,000-square-foot facility with more than 56,000 square feet of exhibit space.

Northern Nevada is undergoing a tourism transformation of sorts, with a new energy and new facilities. The region’s promoters have done an excellent job of creating a distinct identity, marketing to consumers as a fun destination.

Popular annual events such as the Hot August Nights classic car rally, ARTown, Reno Air Races, Reno/Tahoe Wine, Food and Jazz Festival, Mastercraft Pro Wakeboard Tour, Reno Rodeo, Brews and Blues Festival, and Reno River Festival helped boost the Reno area’s visitor volume to nearly 5 million in 2004.

Development of the downtown Reno arts and cultural center, as well as the Truckee River Whitewater Park, have also increased tourism. The National Bowling Stadium hosts tournaments from around the country, including the Women’s International Bowling Conference and the American Bowling Conference.

The "Nevada: Wide Open" advertising campaign promotes Nevada’s outdoor activities to reach a broader range of visitors. Targeted primarily to the leisure traveler, it’s had success in creating the perception that Nevada is an adventure state, with golfing, hiking, skiing and other outdoor recreational activities. The new brand has drawn the attention of retail outdoor outfitter Cabelas, which will begin construction on a huge store in Reno by the end of this year.

The beauty of Nevada being promoted as America’s adventure place is that it does not detract from visitors who come here for other diversions. It just gives them another reason to come to Nevada.

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