Gambling. World-class entertainment. And the prospect of an illicit encounter. Such are the pillars upon which Las Vegas was built.
In the Age of COVID, only the first remains an option, with a face mask and social distance, that is.
Strip room rates have tumbled in lock-step with hotel occupancy, especially in the midweek. Some properties, such as the Palazzo, are taking reservations only for the weekend.
“So in all the years I’ve been here in Las Vegas, I’ve never felt more gloomy, I do say, about what’s happening in Las Vegas short term,” LV Sands President and CEO Rob Goldstein said during an earnings call Wednesday, in which the company reported a second quarter loss of $985 million.
“It cannot make money with limited hotel occupancy — or a negligible occupancy midweek, maybe a 50% capacity weekend,” he said. “In essence, we’re running a regional casino predicated on drive-in businesses. We have airlift somewhere around 40% of what it was and about 40% the occupancy of planes is much less than it was previously. So we’re in a world of hurt here in terms of Las Vegas.”
Wynn Resorts, which paid its workforce during more than two months of closure, began laying off employees this week.
“Vegas is dependent on airlift. It’s dependent on group and convention. It’s not a casino-driven market anymore,” Goldstein said.
The seemingly endless parade of conventions, trade shows, and business conferences that kept hotels near maximum occupancy has dried up. The LVCVA reports 29 shows have cancelled thus far through September. The jobs that supported them have evaporated.
Nevada Public Radio reported last month that 3,000 to 6,000 union members work conventions each year in Las Vegas. Almost all are unemployed, as are the workers employed by convention facilities.
“Following a combination of layoffs and furloughs about 100 working ambassadors remain,” says Las Vegas Convention and Visitors Authority Director of Communications Erica Johnson. “A portion of those working ambassadors are dedicated to the security of the facility. The remaining entail sales, communications, marketing (we’re actively marketing the destination) and administrative roles to keep the agency moving forward on essential functions as we continue to reopen and rebuild the destination and hopefully soon recover.”
“We’re promoting the destination domestically right now to leisure travelers for any day of the week,” says LVCVA Senior Vice President of Communication & Government Affairs Lori Nelson-Kraft. The agency reports visitation has been decimated as a result of COVID. “I think you’re just seeing stronger demand on the weekends. I have noticed that many of our resort partners are doing promotional specials and discounted rates midweek to drive that visitation.”
“We are basically paying people to come here,” said one hotel worker who asked not to be identified.
Marketing in a pandemic
The LVCVA’s award-winning advertising campaigns are the work of R&R Partners, which has held the agency’s marketing contract for decades.
Last month, the LVCVA board approved a $110 million one-year extension. The company receives a monthly fee of $475,000, a content budget of $600,000 a month, and a 6.5 percent commission on its media buys.
The guru of Las Vegas tourism, R&R’s Billy Vassiliadis, did not return a call from the Current.
“I think that there will be a premium on regional and local promotions for casinos around the country for the near future. Las Vegas will have to get creative or be content with the Southern California/Arizona/Utah market until things get better,” says UNLV historian and author David Schwartz.
Once known as a destination for low-cost lodging and cheap buffets, Las Vegas attractions have become increasingly expensive in recent years. Some hotels have are easing or eliminating resort and parking fees in an effort to appear more affordable.
How did Las Vegas thrive in the days before the mega conventions? Are there lessons to be learned from our past?
“Before conventions hotels had so few rooms that they weren’t under a ton of pressure to keep occupancy up,” says Schwartz, adding “it’s much different running a 200-room hotel at 20 percent occupancy than a 3,000-room one.”
Radio, billboards, and the L.A. Times
“We basically let the weekends handle themselves and had little problem keeping the places full,” says former gaming executive Richard Schuetz, who worked at a variety of properties in the 80s.
“During the week day, our efforts were mainly directed at the wholesalers,” says Schuetz.
“We would down-rate for the L.A. Times to attract the free independent traveler out of California during the mid-week, and also worked to intercept the traffic on I-15,” he says. “It is surprising how many people would get in their cars in L.A. and head to Vegas without reservations.”
“We also relied on the billboards on the I-15 corridor,” he says, noting “they had a great radio station at Barstow and this was when folks listened to the radio.”
“Our weekends would generally run 40 to 50 percent casino, 40 percent Free Independent Traveler, and 10 percent wholesale.”
Tour groups arranged by wholesalers helped put “heads in beds.”
Another popular promotion, the junket, faded away with the advent of players’ cards and database marketing, says Schwartz.
“Actually, with air travel being so challenging these days it might not be a terrible idea for a casino to charter a plane to pick up a group of big players,” he says.
LV Sands Chairman and CEO Sheldon Adelson, who brought Comdex to Las Vegas in the early 80s, isn’t giving up on the business sector.
“The fact that people are working from home and communicating from home, that is never going to give up on the trade show business,” he said during Wednesday’s earnings call. “To meet people, to do research, to do recruitment, to make announcements and product introductions, there won’t be a substitute for that.”