The Las Vegas Convention and Visitors Authority unanimously approved a multimillion-dollar performance-based advertising and marketing communications agreement with R&R Partners on Tuesday.
The three-year agreement with the option of two years of extensions is worth $13.5 million a year plus a 6.5 percent commission on the gross amount billed on media.
The new contract takes effect July 1.
R&R has held the contract with the authority since 1980, but in November board members who were considered extending the deal requested an audit and review of the contract. To do that, the board hired an independent national advertising industry productivity consultant, Chicago-based Jones Lundin Beals, to evaluate previous contracts and compare them with similar agreements in other cities.
The consultant said the R&R deal falls around the middle of the industry standard, even though the company is unusual in that it provides a wide variety of advertising, public relations, social media and research services as opposed to specializing in one particular area.
The evaluation also noted R&R’s lengthy relationship with the authority as a plus because of the experience the company brings and the accolades it received for the award-winning “What happens here, stays here” advertising campaign.
The consultant recommended terms in line with other advertising and communications contracts nationwide. Under terms of the deal, R&R would receive a $580,000 monthly agency services fee, a monthly content creation services fee not to exceed $708,333 a month, and a 6.5 percent commission.
In previous contracts, R&R received a monthly agency services fee and a 12.5 percent media commission and 12.5 percent production commission.
The content creation services fee is a maximum amount based on the number of employees assigned to the Las Vegas account. There are 31 full-time-equivalent R&R employees dedicated to the Las Vegas account. To collect that entire amount, the company would have to maintain that staffing level.
Cathy Tull, senior vice president of marketing for the authority, said R&R received $17.9 million under the terms offered in fiscal year 2015. It’s budgeted to get $19 million in the next fiscal year based on estimates of commissions.
Board members also got their first look at the authority’s proposed $295.6 million budget for the 2016 fiscal year, which includes $93.5 million dedicated to advertising and marketing the Las Vegas destination.
The ad budget is down slightly from the amount approved this year, but Rana Lacer, senior vice president of finance, said the amount could increase with midyear augmentation based on improved tax revenue performance.
The authority is expecting a $110,000 revenue bump that would result with an increase in parking fees at Cashman Center. Authority staff is recommending increasing parking fees at Cashman from $4 to $5 beginning Jan. 1 — the first increase in since 2010.
The board also approved a convention rental fee increase at the recommendation of a committee overseeing construction of the $2.3 billion Las Vegas Global Business District project.
Rental fees will increase 13.8 percent at the Las Vegas Convention Center next year followed by a 6 percent increase two years after that.
The rate of 29 cents per net square-foot, in effect since Feb. 14, 2006, would be increased to 33 cents per square-foot on July 1, 2016, and to 35 cents per square-foot on July 1, 2018. Rates also would increase from the current 14.5 cents per net square-foot on move-in and move-out days to 16.5 cents per square-foot on July 1, 2016, and 17.5 cents on July 1, 2018.
The authority expects the increases would increase revenue by $700,000 in fiscal year 2018, $1.3 million by 2019, $3.5 million by 2020, $3.9 million by 2021, $4.4 million by 2022 and $5.2 million by 2023, much of which would be dedicated to the district project.
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