Researcher discusses why trashing Las Vegas is bad for economy

Forget dumping billions into busted banks or crashing car companies. It’s time for America to invest in Elvis.

The King — or at least the version played by Travis Allen — can boost the economy for much less than it costs to keep General Motors motoring.

Allen’s swinging hips and uncanny resemblance to Elvis Presley can jolt a meeting of stiff suits to life, and that’s when dealmaking begins.

“I make people feel at ease, like they are part of Vegas,” said Allen, 31, a Las Vegas-based Elvis impersonator. “They are more relaxed after I’m done.”

It’s guys like Allen, combined with the world’s largest collection of hotel rooms, convention centers and corporate meeting centers, who transformed Las Vegas from a seedy gambling outpost to a global destination for business travelers.

Entertainers, along with thousands of cooks, banquet servers, stagecraft builders, florists, audio-video geeks and event planners are among the army that supported more than 22,000 meetings and conventions last year in Las Vegas, which generated about $8.5 billion for the local economy.

Las Vegas hosts 44 of the top 200 conventions in the country, more than any other city. Orlando, Fla., is second at 24, followed by Chicago at 20, the magazine Tradeshow Week reports.

Allen remembers working one particularly grueling corporate meeting.

The corporate group was about to start an entire day of meetings, eight hours in conference rooms staring at each other and watching presentations.

Managers called in Allen, who plays young Elvis, for a rousing rendition of “A Little Less Conversation,” to lighten the mood.

“They just wanted to get people broken up a little bit so they were a little less tense,” Allen said.

For Allen, making people feel good is serious business.

For the country, his work is part of the lubricant Las Vegas adds to the cogs of industry that make the American economy work.

“If Las Vegas didn’t exist, you would have to create it,” said Robert Lang, co-director of the Metropolitan Institute at Virginia Tech University.

The institute researches national and international economies, development and other urban issues.

“In the kind of economy we have created, you have the freedom not to work face to face; the face-to-face exchanges … take on more importance,” Lang said. “Las Vegas is as important as the commodities exchanges in Chicago or the markets on Wall Street.”

Lang said Las Vegas has a combination of meeting facilities and after-hours amenities that make it critical to global commerce. Industries, from furniture to wireless communication, converge annually in Sin City because it is easy to reach by air, offers plenty of hotel space and has enough fun to ensure a good turnout.

The party potential, Lang said, is as important as the meeting facilities because clubs, casinos and restaurants are where businesspeople build trust that becomes a foundation for future commerce.

“Gambling can do that too, shows, booze, everything that’s in the city can do that,” Lang said. “There are people who have only known each other in Las Vegas, only meet in Las Vegas, only will meet in Las Vegas.”

Lately, though, Allen and the rest of the folks who support the massive meeting industry are all shook up.

The economy’s steep downturn is prompting companies to drastically cut back on travel and other expenses, which affects the entire meeting and convention industry.

Las Vegas in particular has been under attack by politicians and pundits who say that with the economy tanking, there’s no need for government workers and companies, particularly those that took bailout money from the federal government, to be spending it in Las Vegas.

The simmering sentiment grew to a boil last month with a remark by President Barack Obama to a blue-collar crowd in Elkhart, Ind.

Obama wanted to show the folks his plan to spend nearly $800 billion to pull America out of its economic tailspin, including checks to prevent waste of taxpayer money.

“You can’t go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer’s dime,” the president said.

Even as Obama was speaking, officials at Wells Fargo bank, recipient of about $25 billion in bailout money, were sweating over news reports by CNN that criticized an event at The Venetian by another bank. The report painted a picture of fat cats cavorting around Las Vegas even as their industry crumbled. Wells Fargo eventually canceled its planned 12-day event at Wynn Las Vegas.

Obama’s riff generated quick applause in Indiana, but it caused hard feelings in the meeting industry around the nation.

“I voted for the man. I’d love to get him for five minutes to explain what he and his administration and the press are doing to this industry,” said Dick Gaeta, president of Premiere Incentives of Marblehead, Mass., which does business in Las Vegas. “Their mindset is in the boardroom. They are forgetting about the bellmen and the waiters and the cooks and the maids.”

After Obama spoke, news broke that officials at Goldman Sachs canceled an event planned at Mandalay Bay. The company, which was trying to create a facade of fiscal austerity, reportedly spent $600,000 on a cancellation fee and moved the event to San Francisco, a costlier destination than Las Vegas.

In the weeks since, many more companies, representing tens of millions of dollars in lost commerce for Las Vegas, have backed out of events.

And others piled on.

Sen. Tom Coburn, R-Okla., started taking swipes at government workers who would meet in Las Vegas. Coburn jumped on reports that workers from the Federal Emergency Management Agency would be meeting here.

He called the very notion “an extravagant junket” by the government when “less expensive alternatives exist.”

Never mind that Coburn was wrong. The meeting in question was in Las Vegas because it was a FEMA training session for Las Vegas-area federal workers.

New York Times columnist Maureen Dowd used Las Vegas as a punch line in a column scolding, “impervious, imperial suits who squander taxpayers’ money.”

Obama has since revised his original comments, sort of.

On Thursday White House press secretary Robert Gibbs said, “I don’t think the president said, ‘Don’t go to Las Vegas.'”

But he added: “His concern, the concern he specifically expressed, had to do with the use of taxpayer or use of money by institutions that received a lot of assistance from the taxpayers. Obviously, that’s not something he would incorporate.”

This clarification seems unlikely to do much to remove the stigma that’s been attached to Las Vegas in the hearts and minds of much of the public.

“I can’t begin to tell you how many people now won’t even look at Las Vegas when they are doing a search,” said Richard Harper, vice president of sales and marketing at Mandalay Bay. “I’ve got hundreds of people next week who won’t work as a result of this.”

Mandalay Bay has one of the three major convention centers in Las Vegas, the other two being Sands Expo and Convention Center and Las Vegas Convention Center.

The entire hotel-casino employs about 7,000 people.

Harper said that since the anti-Las Vegas sentiment started, he’s been spending his days strengthening existing relationships and hustling to replace groups that have backed out.

“Las Vegas is about occupancy. These properties live and thrive off a full house,” Harper said. “We need some major, Fortune 500 companies’ CEOs … to stand up and defend their right to hold meetings in Las Vegas.”

Perhaps those top execs could turn to executive Gaeta for talking points. Gaeta’s company organizes incentive trips to destinations such as Las Vegas and Hawaii for employees of companies who reach certain goals.

Such trips have become rhetorical targets in the effort to highlight corporate excess.

It’s a misguided sentiment, said Gaeta, who has the numbers to back his point.

He argues that if an incentive trip is planned correctly, there’s no way it can be a waste. That’s because the entire trip is based on people reaching new goals for sales, revenue or some other value metric.

“We track the numbers. It is a numbers game. If people didn’t attain their goals then the program never happens,” he said. “It is canceled.”

Gaeta cited the example of a computer hardware company seeking to motivate workers to improve sales. The company wanted to increase sales 20 percent, increase market share 30 percent and maintain operating income at 10 percent or greater.

Gaeta’s firm arranged a program that aligned the company goals with incentives that included a “Top Gun” style flight school experience and stays at a posh resort.

The cost of the program was $186,900. But the company hit all the targets it sought and made incremental revenue of $934,700 — money that wouldn’t have come in without the sales initiative.

As a result, the program was a net gain of $747,800.

Gaeta said those kinds of circumstances don’t often get included when commentators ridicule incentive trips by workers at companies in the news.

“Companies that will remain nameless that I know about are canceling major programs. And these are companies that are getting not a nickel from the government,” Gaeta said. “Now, with what we are going through, is the time we want to motivate people to buy more, sell more.”

Outside of professional meeting planners and folks who travel to Las Vegas on business, the reputation of the area is summarized by the Las Vegas Convention and Visitors Authority’s “What happens here, stays here” ad campaign.

“Their advertising campaign is almost coming back to create negative press for them,” he said.

The authority must now walk the line between promoting Las Vegas as a fun place for the 85 percent of guests visiting for leisure with a professional message to the 15 percent of visitors in Las Vegas on business.

The latter group is particularly valuable because its individuals not only spend their personal money, their companies also spend to host parties, meetings and conventions.

“Everybody’s primary concern is the economy, and how their meeting or convention provides value to their organization,” said Michael Goldsmith, the authority’s convention sales director.

In 2008, the authority’s 14 sales managers generated 4,013 leads for local hotels. Another team of five lined up 94 events for the Las Vegas Convention Center.

The authority has launched new incentive programs for meeting planners to book events in Las Vegas as well as an electronic request for proposal, or RFP, system to streamline the process.

“The obvious thing that anyone needs to be able to report back up is they are getting return on investment,” Goldsmith said.

If there’s a silver lining to the recent battering, it’s that Las Vegas is again under pressure to emphasize service and value.

“Las Vegas needs to be perceived as a very cost-effective, viable location for professional business meetings,” said Stephanie Arone of Activity Planners, a Las Vegas-based destination management company.

The company acts as a liaison for out-of-town businesses that want help organizing parties, meals, transportation and anything else it might need for workers on business in Las Vegas.

“In lean times, the third party always has to prove their worth,” she said. “This situation, as unfortunate as it is, has given a bit of a reality check to many service providers.”

Activity Planners has been in business 32 years and Arone said she’s well-versed in showing clients how her work is a boost, not a drain, for their bottom line.

The recession coupled with anti-Las Vegas hysteria has been fatal for newer competitors, especially those that started with an eye toward exploiting the boom instead of creating value for clients.

“During any boom, there are going to be people trying to maximize their personal gain from it,” Arone said.

Lang said the nation’s economic recovery will be delayed as long as meetings in general and Las Vegas specifically are demonized.

“People still have to have pretty lengthy meetings and exchange things face to face,” he said. “The most logical place where they would meet is stigmatized. That is not going to help.”

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-477-3861.

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