Posts tagged lvcva

Split-level in Vegas Seven

It’s Thursday, which means another Green Felt Journal column in Vegas Seven. Here’s the crux of what I call the “split-level strategy”:

So casinos are pursuing a “split-level” strategy that harks back to the 1970s and earlier—keeping prices low for bargain hunters while pursuing high-end play at the baccarat tables. It’s not the mid-1980s approach of making a profit on the sheer margin of visitors, since it’s much more expensive to borrow, build and maintain casinos today. And it’s not the early-2000s pursuit of free-spending travelers willing to pay a premium for rooms, food and entertainment. It’s looking like a little bit of both, taken to extremes.

via Adopting the old ‘split-level’ strategy | Vegas Seven.

I talked about this strategy last week, in some detail, but I wrote this article first, so you actually read my response to what I wrote before I wrote it, if that makes sense. Not quite the grandfather paradox, but it does muddle the timeline a bit.

This is also, by the way, what I was referencing when I talked to the LVRJ about the Hard Rock’s plans to chase the Asian-American middle-upper-level roller. It is a huge potential market, but basing your strategy on targeting local players of any ethnicity is risky right now, because of obvious reverses in both employment and housing.

Having looked over the numbers even more closely over the past week, I’m even more convinced that without the high rollers spiking the baccarat numbers, we’d be telling a very different story about 2009. Hopefully I’ll get to that later today.

I went with “split-level strategy” because it sounds retro and the strategy is very, very retro. As I said, it’s totally different from what worked in the 1980s and the early 2000s, and it is risky, but given the economic climate right now, there are few other options.

2009 is history

…at least as far as the LVCVA is concerned. The December and year-end visitor numbers, minus the gaming figures for now, was just released. Here are some highlights from the executive summary:

December: Visitor volume up 1.5%, room inventory up 6% compared to December 2008.
2009 (total): Visitor volume down 3%, room inventory up 6% compared to calendar 2009
Average Daily Rate (ADR) was down a whopping 22% for the year, but only 5.8% in December
Both the number of conventions held (19,394) and the number of attendees (4,492,275) were down substantially for the year (13.6% and 23.9% respectively)
Air passengers deplaned declined by 8.2%, traffic on all highway was up by 2.5%, and on I-15 by 4%
2009 LAS VEGAS YEAR-TO-DATE EXECUTIVE SUMMARY

First, the good news. The drop in ADR was less than double-digits for the first time all year. Considering that March and April saw drops of more than 30%, losing less than 6% in room rates with a jump in occupancy in December was actually good news. Convention travel showed a year-over-year increase in December, the first increase all year. I don’t know if this classifies as “green shoots,” but it’s definitely better than a straight year of annual declines.

Now, the so-so news. Visitor volume was down 3 percent, which is actually better than the 2008 decline of 4%. There seems to be some correlation between the falling ADR and the rising visitor volume, meaning that cutting prices on rooms helped to lure more people to town–no surprises there. With the number of air passengers falling, casinos clearly need to ramp up their outreach to Southern California and encourage people to make the drive up I-15.

But wait–there is also some bad news. Visitor volume fell by 3 percent for the year. Room inventory increased by 6 percent. It doesn’t take an economist to realize that there’s still an imbalance between supply and demand that does not bode well for the future. The increase in visitor volume for December–despite a highly-hyped casino opening–was less than the increases in the previous three months. Since September, the monthly gain has decreased steadily. In December, at least, it doesn’t seem like the new supply brought enough visitors to Las Vegas to compensate for the increase in capacity.

There is still hope, though. When the gaming numbers come out, we’ll get a better idea of whether the people who came to town in December gambled more than they did in 2008. That was the case in November, but the 6.9% bump in revenue for that month was largely driven by high-end baccarat play, as the slot play actually fell by a billion dollars, an indicator that people for the most part are gambling less. If high-end play increases, then a jump in gaming revenue can compensate for the lower occupancy rates, at least for the short term.

But the larger trend–less air traffic, more auto traffic–seems to run counter to the high-end strategy. We’ve got a confusing year ahead of us, that’s for sure.

Vegas to court Canadians?

The LVCVA is looking to step up its work in Canada, hoping to lure more visitors from the Great White North to Vegas. From the LVRJ:

After 26 years as a Las Vegas visitor, Canadian James Dixon is familiar with Sin City’s hard-sell recruiting tactics. The 55-year-old Toronto-area resident gets monthly mailers from Las Vegas hotels and weekly sales pitches in his workplace e-mail, in addition to unsolicited offers for discounts and comps on the Strip.

“Before, we used to have to phone to see if we could get any comps,” said Dixon, whose visits have evolved from guy-weekend getaways in the early 1980s to family vacations today. “Now they send it to us.”

After today, Dixon and countless other Canadians may be getting even more pitches to visit Las Vegas. The Las Vegas Convention and Visitors Authority is scheduled to vote on whether to approve a contract that would put Canadian marketing in the hands of a specialist with the goal of attracting even more visitors from Southern Nevada’s No. 1 foreign guest source.

The tourism agency wants to divert Canadians who take vacations in Mexico and the Caribbean to Las Vegas. It also wants to increase the number of Canadian business and convention events in Southern Nevada.

“There is potential for us to capture some of that business,” said Terry Jicinsky, senior vice president of marketing at the authority.

An estimated 1.9 million Canadians visited Las Vegas last year. Even more skipped the United States altogether in favor of Mexican and Caribbean trips.

Last winter about 650,000 Canadians went to Mexico and 400,000 went to the Dominican Republic, according to the Conference Board of Canada, a nonprofit economic research firm. About 275,000 Canadians made winter trips to Las Vegas. The number is well behind other destinations but is a nearly 15 percent increase from the previous winter.

Building on the increase is part of the authority’s strategy to attract 43 million people to Las Vegas annually by the end of 2010. The authority also wants to increase the percentage of foreign visitors to 15 percent, up from 12 percent today.

Increasing the number and diversity of visitors is important because there will be nearly 40,000 new hotel rooms in Las Vegas by the end of the decade. Recruiting visitors is key to maintaining occupancy rates around 90 percent, no small feat considering there are already about 133,000 hotel rooms in Southern Nevada.

ReviewJournal.com – Business – How about visiting Vegas, eh?

Maybe a Canadian-themed casino is the missing element here. After all, casinos drape themselves in red and gold banners every Chinese New Year to appeal to Asian visitors. Why not a conscious move towards familiar Canadian icons in Vegas casino. Since I’ve only been to Canada a few times I can only speculate about how’d they do this, but bringing more hockey to town would be a great start.

Quote of the Day, 01/04/05

“We need to educate international tourists before we get to the branding or experience of Las Vegas because if they don’t know what Las Vegas stands for it will fall on deaf ears.”

–Terry Jicinsky, senior vice president of marketing for the Las Vegas Convention and Visitors Authority

Read the whole story here: Las Vegas SUN: Vegas ad campaign may not mean success with foreign tourists.

It’s quite a hoot. It seems that the slogan is too risque for some conservative Asian cultures, yet hardly provocative for permissive Europeans.