More people making way to Las Vegas; officials wary of fuel effects

The recovery of the Las Vegas visitor industry continued in March, but with signs of potential trouble looming ahead due to rising fuel prices.

According to monthly benchmarks released by the Las Vegas Convention and Visitors Authority, the 3.4 million people who came to town in March marked a 5.6 percent gain compared to one year ago. This continued a string of gains over the past 13 months, although the numbers are still running below the banner year of 2007.

"Overall, the economy has been improving, although it has been slow and gradual," said Kevin Bagger, the authority's senior vice director of marketing.

In particular, anecdotal evidence has shown that while people are traveling in greater numbers, their average spending has not gone up as much. Bagger said the authority does not keep spending numbers.

Boosted by a resurgent convention business, the average hotel room rate shot up 19.2 percent to $111.13 a night and occupancy rose 4.8 percentage points, to 87.2 percent.

Because many conventioneers are visiting with expense accounts, they worry less about price than do tourists. Convention attendance rose 10.3 percent in March, on 3.6 percent fewer events.

The Conexpo/ConAgg construction industry show, held once every three years, bolstered the March numbers with about 120,000 attendees.

"We are encouraged by the visitor statistics," wrote Robert LaFleur, an analyst with Hudson Securities in Norwalk, Conn. "That said, the (first quarter) is front loaded with conventions and we will be monitoring how trends play out as we head into the seasonally slower summer."

One potential drag on growth is apparent in highway traffic counts, which fell 4.2 percent on I-15 at Primm. Bagger said several factors could have contributed to this, such as greater carpooling or less driving by local residents.

However, that also corresponded with gasoline prices in the critical Southern California market, which accounts for about a fourth of Las Vegas visitors, rising above $4 per gallon. Fuel price surveys of various regions within Southern California show regular gasoline now averaging about $4.25 per gallon, with a handful of stations selling premium for more than $5.

Traffic on all highways through Las Vegas dropped 1.4 percent. All highways showed a traffic increase of 3.1 percent last year, and 2.6 percent at Primm. But as gasoline prices rose in mid-2008, traffic counts and visitor counts fell.

Air passenger counts have risen this year, but several airlines said they plan to cut schedules later this year due to rising jet fuel prices.

At its monthly board meeting, the authority detailed plans to boost marketing spending by 14 percent, to $24 million through September, to try to persuade more people to vacation here. In doing so, the campaign will add Dallas and Houston to six other cities, including three in California, where the authority puts strong emphasis.

Executive Vice President Rob Dondero of R&R Partners, the authority's outside advertising agency, said Texas was chosen because of a relatively strong economy and numerous nonstop flights. In addition, he said, the Texas markets cost less for air time than do some other major cities.

Contact reporter Tim O'Reiley at
toreiley@reviewjournal.com or 702-387-5290.