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With loss of room tax revenue coming, LVCVA looks to cut budget

Anticipating a massive revenue drop in the months ahead, the Las Vegas Convention and Visitors Authority is slashing its budget by $79 million and already has begun pay cuts, furloughs and canceling capital projects.

More cuts are expected in the 2020-21 fiscal year, which starts July 1.

But one key project — the $980.3 million West Hall expansion of the Las Vegas Convention Center and its $52.5 million underground people-mover — will continue as scheduled.

The organization’s board of directors on Tuesday will consider an 11-point response strategy to prepare for the revenue drought brought about by the closure of resorts and the reduction of travel from the coronavirus pandemic.

“I haven’t had too many businesses that I have been in a situation where I had no revenue at all for a period of time,” President and CEO Steve Hill said. “And we’re in a position where it’s obviously hard to project the timing of this (recovery).”

Under a strategy Hill will present to the 14-member board in a telephone meeting Tuesday, the LVCVA will consider several proposals.

Executive, management and professional pay for performance elimination: Those are bonuses personnel could earn if they reached certain performance goals. They’re all gone.

C-Suite compensation reductions: Hill said he is taking a 10 percent pay cut and other top officers will see their pay reduced by 4 percent to 10 percent.

Hiring freeze: Two recruitment efforts will be completed, but no other hirings will occur after that.

Temporary and on-call staff furloughs: The LVCVA has about 400 workers they can call on during busy periods with work ranging from parking and traffic monitoring to convention and trade show registration and assistance.

Deferral of capital projects: The West Hall expansion and the people-mover are safe and are 77 percent complete. But Hill said a two-year $540 million renovation of the Las Vegas Convention Center’s other four exhibition halls that was to begin in 2021 would be put on hold, probably for at least two years. Moving LVCVA offices to a location on Convention Center Drive also has been scratched. “We are going to need to get back to room tax revenue that is basically the same as what it was before this hit before we’re going to be able to move forward with the entire renovation project we had in mind,” Hill said.

Professional service contract reductions, suspensions and terminations: That will save $9 million and includes the cancellation of international representative office agreements. It also includes the contract of former Las Vegas Mayor Oscar Goodman, who headed the LVCVA’s Host Committee as the city’s lead ambassador. His $72,000 annual contract was canceled in March.

Departmental budget cuts and operational changes: Miscellaneous changes will save $12 million.

Voluntary separation program: A similar program was implemented in June to be offered to employees on the verge of retirement. The LVCVA currently has 455 full-time employees.

Three other strategies will be considered by the board and implemented as necessary:

Nonvoluntary ambassador separation and furloughs: Other tourism ambassadors also may be furloughed.

Reductions in full-time ambassador hours and furloughs.

Utilization of financial reserves: Board action may be required in separate action and probably will be addressed in May when the board considers the 2020-21 fiscal year budget.

“I’ve told our folks and I’ve told others if you’re going to be in the tourism and hospitality industry, being in the tourism and hospitality industry in Las Vegas is absolutely still the best place to be,” Hill said.

But what the future holds is still unknown. A robust advertising plan is expected to remain, but next year’s budget might be lower than in the past.

“People love Las Vegas. They’ll still love Las Vegas. We came into this situation on a roll. We’ve set records in six of the nine months prior to March. There’s a reason for that, and that reason still exists,” Hill said.

“Right now, people are just not able to travel, and that’s what’s causing the problem. The product that we have — everything that is Las Vegas — is still there and will be there when this is over,” he said. “But the next year is going to be a rough year, and how rough that’s going to be is not as predictable as our economy has been in the past.”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

A previous version of this story incorrectly reported when former Las Vegas Mayor Oscar Goodman’s contract was terminated. It was terminated in March.

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