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You are here: Home / Features / Feature Story / Lights Out, Doors Locked

Lights Out, Doors LockedNevada’s Tourism Industry Rides Out the Coronavirus Pandemic

June 1, 2020 By Jennifer Rachel Baumer Leave a Comment

 

Early morning on March 17, Nevada casinos locked their doors.

Sandra Morgan, Nevada Gaming Control Board chair, has lived in Nevada since she was a year old. She grew up around the tourism industry. “My mother worked in the hospitality industry,” she explained. “When you think about the closure, and the fact they never had to lock the doors because the doors were always open, and it’s definitely something nobody would ever want to do again.”

The COVID-19 virus has caused an unprecedented economic impact on Nevada’s tourism industry. The financial ramifications on hospitality and gaming workers and their families, on businesses and state and local budgets, is far reaching.

According to a report ordered by Nevada Resort Association, tourism is responsible for a significant percentage of Nevada’s General Fund revenue, supports one in three jobs, pays $20 billion in wages and salaries annually, $1.8 billion in industry-specific fees and taxes and $75 billion in annual economic output (45 percent of the state’s aggregate output). The meeting and convention industry in Las Vegas alone supports 67,000 jobs and $11 billion in economic impact. According to the report, should the tourism industry remain shuttered 30 to 90 days, recovery will take 12 to 18 months, put more than 480,000 jobs and $9 billion in wages and salaries at risk and cause $39 billion in total economic impact.

It’s imperative, Morgan said, as Nevada reopens from the closures caused by the COVID-19 pandemic, the state does it right.

Nevada’s No. 1 Industry

Even as Nevada’s economy diversifies, gaming, hospitality, travel and tourism remain the foundation.

“The industry employs approximately 320,000 individuals who rely on about $1.3 billion in wages and salary payments. That industry also accounts for nearly 38 percent of all total revenues or taxes within Nevada’s State General Fund,” said Morgan. Another 50,000 to 100,000 individuals are employed in gaming manufacturing, building the casino games.

Tourism and gaming also generate industry specific taxes including gross gaming taxes, live entertainment taxes and room taxes.

“Industry specific taxes total approximately $1.8 billion,” said Morgan. The first month of reporting Nevada’s taxable gaming revenue and fee and tax collections in March saw a 53.8 percent decrease – about a $42.8 million decrease for percentage fee collections based on taxable revenue. That was with tourism closed down for only the second half of the month of March.

“Revenue is considerably down,” said Jennifer Cunningham, executive vice president, Reno-Sparks Convention & Visitors Authority (RSCVA). “The select service properties are still open for essential travel and so we are receiving room tax from them but with air service down 95 percent and many of the hotel casinos closed, that’s impacted us dramatically.”

Las Vegas has approximately 20,000 hotel rooms available in standalone hotels like Marriott or Hampton Inns. “Those types of facilities have the right to be open and some are,” said Steve Hill, president and CEO, Las Vegas Visitors and Convention Authority (LVCVA).

But other properties shuttered with the closure order, and room tax makes up 80 percent of the LVCVA’s revenue with the remaining 20 percent coming from renting the Las Vegas Convention Center facility for trade shows and conferences which have had to cancel or reschedule.

The closure happened when Vegas was on a roll. “We had set records for six of the previous nine months and we were going to set a record on virtually every category for our fiscal year that ends at the end of June in terms of visitation and room tax collected and all the kinds of metrics we have,” said Hill.

Roadmap to Recovery

Governor Sisolak’s Roadmap to Recovery for Nevada, guidelines and protocols for individuals and businesses, unveiled April 21, breaks reopening into phases. The first phase that reopened nonessential businesses in May didn’t include casinos, nightclubs or bars that don’t serve food.

Not every business that could open chose to; not every county allowed reopening of every business. The decision to reopen was partially up to county commissions because different counties were facing different situations and had to meet certain thresholds before moving forward.

“It’s important we see the health and safety results from the first phase of the reopening and following that the gaming properties can start to reopen in phase 2, which could be around the end of May or early June,” said Hill.

Reopening the casinos will mean starting up from the first time everything has actually closed. “We estimate when reopening does occur it will take 12 to 18 months to actually recover. That’s an estimate, because we don’t know how deep it will go until then,” said Morgan.

“We can do everything here that we can and get it just right, and until people are comfortable traveling again, [our recovery is going to be challenged]. It’s going to have a tremendous impact on everything from ecotourism in the rural counties to business travel in northern Nevada, conventions and shows in southern Nevada and leisure guests across the entire sector,” said Virginia Valentine, president and CEO, Nevada Resort Association.

More than Gaming

“Tourism employs 40,000 to 50,000 people in Northern Nevada,” said Cunningham. “There may be a difference with the tourism in that Southern Nevada enjoys much more international diversity of visitation whereas we’re fortunate in this situation that many of our visitors are much more regional in nature.”

Most visitors to Reno-Tahoe come from the West Coast and while there’s convention and conference business that’s a national draw, many visitors are from northern and southern California, Arizona, Colorado, Washington and Oregon, according to Cunningham. Many of those visitors are looking for outdoor recreation; since that’s still open, it’s an economic benefit.

When the Great Recession hit Nevada’s economy, the state led the nation for 60 months in foreclosures and unemployment. Tourism took a significant hit, but visitors weren’t afraid to travel; it was more likely they couldn’t afford to. For those who could afford it, Nevada became a great drive-to destination.

Tourism is more than resorts and casinos. Southern Nevada has its trade shows and conferences. Northern Nevada has outdoor recreation. Rural counties benefit from ecotourism and visitors driving through. Tourism includes gaming, entertainment, outdoor recreation, medical tourism, conventions and trade shows. Each is impacted a little differently. Northern Nevada includes a sports segment.

“For many years we’ve personalized our approach to each of these segments,” said Cunningham. With regard to the sports segment, “Our largest client is the United States Bowling Congress. Typically when they have a tournament in town, they bring in around 70,000 people for the open championships.” USBC was scheduled for March through July. When the state locked down, dates were pushed first to May and then to September.

“The USBC bowlers have already addressed how to accommodate social distancing and are ready to go in September with some things they’re going to put into place to make their bowlers feel comfortable,” said Cunningham. Other sports events like Jam on It Basketball Tournament and volleyball championships still plan to hold their events in Reno, and are working to reschedule.

In southern Nevada, going into the 2021 fiscal year in July the LVCVA had been looking at the largest booking of shows in its history. “Whether we can have them or not remains to be seen,” said Hill, but most of the shows were interested in rescheduling. That means balancing setup, event and teardown time for each event and making them fit in times they weren’t scheduled for originally.

Understanding how visitors feel about returning to Las Vegas and what will make them feel comfortable will help Visitors and Convention authorities develop marketing plans.

“The Great Recession didn’t really change the way people thought about traveling,” said Valentine. “COVID has changed that. I think we will see it’s probably going to take a lot longer and be a slower recovery as people begin to open [businesses] again.”

Shut Fast, Open Slow

Closing Nevada tourism happened overnight. Governor Sisolak issued the State of Nevada Executive Department’s Declaration of Emergency Directive 002, ordering businesses to cease operations by 11:59 p.m. March 17. The original date of reopening was April 30; that kept getting pushed back.

Nevada Gaming Control Board put together reopening guidelines in the Policy Memorandum of April 21, Procedures for Reopening after Temporary Closure due to COVID-19. Policies cover employee training and safety, social distancing protocols, sanitation guidelines, gaming and resort operations. Gaming licensees from tiny to massive are required to submit plans detailing reopening and health and safety procedures at least seven days before reopening. Many casinos shared their plans on websites and social media, keeping transparent and in contact with guests. During closure casinos kept facilities clean and security patrolled empty venues.

“The disinfecting process will happen in the run up to reopening and I think that will largely be done for that time frame and that specific purpose by third party companies who are specifically trained in disinfecting for this virus,” said Hill.

Grand Reopenings

Gaming Control Board members met with University Medical Center (UMC) personnel, including Dr. Medina-Garcia, an infectious disease physician, Dr. Fermin Leguen, the director of Southern Nevada Health District and Washoe County District Health Officer Kevin Dick. They are working together to create guidelines for safely reopening, and to address COVID-19 testing, social distancing plans and contact tracing for flareups of the virus.

The Governor’s roadmap for recovery includes ensuring there is a sufficient health workforce capacity in local and state health departments to conduct contact tracing – detecting, testing, tracing and isolating infected individuals. The guidelines request properties designate an individual to serve as point of contact liaison between the property and the health departments.

Focusing on the health and safety of visitors has always been a top priority for resorts, said Valentine. “Think of the millions of meals that are served every year in Nevada for tourists and the level of safety that has to go on with food and beverage handling. I think you’re going to see even that stepped up.”

Going forward, guests will see enhanced cleaning taking place by day, where once staff cleaned by night. “We want people to see those cleaning efforts, the extra efforts that are being made so they feel safe.”

Gatherings will remain small and nightclubs will probably take longer to reopen. A return to normalcy will be gradual. “There’s conversation now about testing and screening that’s going to go on. Those are positive things that are going to not only elevate the level of safety but make consumers feel safe too. That’s important,” said Valentine.

As properties open, along with testing and cleaning efforts, guests may receive personal protective equipment on arrival, hand wipes might be distributed, there may be hygiene kits available in hotel rooms. Instead of a mint on the pillow? A small bottle of hand sanitizer.

Rather than being off-putting, changes are expected to be welcome. Resorts are documenting health and safety precautions on websites and talking about social distancing on social media. They’re providing updates on reopening efforts, talking about all the fun things there still are to do in Nevada.

“Everybody is working really hard to get it just right,” said Valentine.

“We have not paused our online and social media presence, we’re still out there to stay on top of mind,” said Cunningham. Salespeople reach out to groups that want to book events in northern Nevada and work to secure conventions in the region. “They’re reaching out on an individual basis to make sure the clients know what’s being done to ensure their group’s safety and that the destination at the time will be safe to travel to. We take our responsibility very seriously and we’re doing what we can to help bring back tourism when the time is right.”

There are overall guidelines in place, but casinos are still required to submit their own plans.

“The proposals, or ideas, licensees have shared are things that honestly the board probably wouldn’t have thought of,” said Morgan. Every property is different, so individual plans are left to individual properties. “[Changes] could be changing their slot floor, or putting up Plexiglass, masks or other personal protective equipment or giving out hand wipes when people enter.”

Morgan said she expected a mix of such measures, but with plans properties put in place, it’s imperative the public follows the guidelines.

“The licensees know what the guidelines will be and will implement them, but what if the public doesn’t follow them? We don’t want to see a spike and have to roll this back again,” said Morgan. “When it’s done it has to be done right, so I really hope Nevadans hear that, our guests hear that, and take this seriously so eventually we can get back to the way things were again.”

What is a PEO?

Are you bogged down by employee paperwork?

Is your payroll a pain in the neck?

Or maybe, attracting and retaining good employees is a constant struggle because your benefits aren’t up to par.

Whatever the cause may be, HR challenges can be a real hindrance to your business’ growth. It’s easy to overlook key revenue-generating opportunities when you’re distracted by your HR to-dos.

The good news: There’s help out there – it’s called a professional employer organization (PEO).

These organizations can work with your company to provide comprehensive and affordable payroll, benefits and human resource services through a business-to-business relationship called “co-employment.”

What is co-employment?

As a business leader, you may cringe a little when you hear the term co-employment. But it’s not as intrusive as it may sound. Through the co-employment relationship, a PEO takes on many of your employee-related employer responsibilities, while you continue to manage and run your business. You’ll still maintain control over managing your employees’ daily to-dos and core job functions as well as maintaining your organizational structure.

As the co-employer, the PEO takes on certain, specific employer obligations, as set forth in your service agreement. This allows the PEO to handle functions such as payroll, benefits, tax remittance and related government filings. Because it acts as an employer for those purposes, the PEO can assume a greater amount of responsibility than, for example, a payroll company. Typically, a PEO can manage many of the HR jobs that you would have to outsource to multiple service providers – like payroll processing, benefit plan management and administration, recruiting and training, and more. This way you can spend less time managing various vendor relationships.

What’s more – through this co-employment relationship with a PEO – your company can effectively and efficiently mitigate a substantial portion of the risk and responsibility associated with having employees, including risks associated with things like:

  • Correctly reporting, collecting and depositing taxes with state and federal authorities

  • I-9 requirements

  • EEO reporting and claim resolution

  • Management of certain employee-related claims and provision of Employee Practice Liability Insurance (EPLI)

Most PEOs employ specialists who are responsible for monitoring many employer-related state and federal laws. Armed with this knowledge, the specialist stays abreast of constantly shifting laws, regulations and reporting requirements that impact the services the PEO provides to your business.

A PEO does NOT

  • Control your business. PEOs provide access to seasoned HR professionals whose guidance and advice you can solicit when you need assistance. They help manage your company’s employee-related administration and risks, but you maintain control of business and operational decisions.

  • Replace your internal HR staff. PEOs align with your company’s existing HR department or staff to provide complimentary expertise, such as support in administering workplace policies and making shifts in company culture. A good PEO will employ seasoned HR staff who are certified HR professionals who have experience with various industries. And as a PEO client, their expertise is at your disposal. This can prove invaluable when you’re faced with complicated HR situations or workplace improvement initiatives, such as increasing employee engagement, addressing conflict effectively or developing compensation programs that connect to business goals.

  • Cause disruption to your workplace. There is minimal, if any, disruption to employees when you work with a PEO. They will see the PEO’s name on their paycheck and other documents, but will likely appreciate the greater depth and breadth of benefits offered as a result. In addition, some PEOs offer online self-service options that allow employees to access and manage their personal, benefits and paycheck information whenever they want.

Summing it all up

Being an employer has never been more challenging, highly regulated and time consuming than it is today. The good news is that you don’t have to go it alone. Now that you can answer the question “What is a PEO?” you can begin your search for a reputable PEO that can help drive your business forward.

To learn more about the advantages a PEO like Insperity has to offer your business and how to determine if a co-employment relationship is the right decision for your company, download our free e-book, HR Outsourcing: A Step-by-Step Guide to Professional Employer Organizations (PEOs).

Filed Under: Feature Story Tagged With: coronavirus, COVID-19, Dr. Fermin Leguen, Dr. Medina-Garcia, Gaming Control Board, Governor Sisolak, Jennifer Cunningham, Kevin Dick, Las Vegas business, Las Vegas Visitors and Convention Authority (LVCVA), Nevada business, Nevada Gaming Control Board, Nevada Gaming Industry, Nevada Resort Association, Nevada Tourism Industry, Reno business, Reno-Sparks Convention & Visitors Authority (RSCVA), Roadmap to Recovery, Sandra Morgan, Southern Nevada Health District, Steve Hill, University Medical Center (UMC), Virginia Valentine, Washoe County District Health

Paul Krakovitz: Intermountain Healthcare

Edward Vance: EV&A Architects

Scott Arkills: Silver State Schools Credit Union

Tonya Ruby: Cox Media Las Vegas

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