Las Vegas sets record for visitors

LAS VEGAS, Nevada -- Las Vegas attracted a record number of tourists in 2006 despite losing 581 rooms from its hotel inventory, the first such decrease since 1992.

Las Vegas had 38.9 million visitors in 2006, up slightly less than 1 percent from 2005.

The increase came despite the number of hotel rooms decreasing to 132,605.

The last time the number of hotel rooms dropped, the inventory lost 356 rooms and finished the year at 76,523.

Even though it lost hotel rooms, the region managed to increase the number of visitors by boosting the occupancy rate to 89.7 percent, up half of 1 percent from the previous year.

"That really paints the picture of why Las Vegas has been successful," Kevin Bagger, director of Internet marketing and research for the Las Vegas Convention and Visitors Authority, told the authority board Tuesday.

Meanwhile, a report by Gov. Jim Gibbons' transition team that looked at the areas of tourism and gaming was released late Tuesday and questioned the continued need for the convention authority. The report, dated Monday, was posted on the governor's Web site and proposed that the collection of room taxes, which fund the convention authority, be eliminated or rolled back.

MGM Mirage spokesman Alan Feldman said casino companies and the authority contribute to the higher visitation by working hard to fill hotel rooms during slow times.

Feldman said MGM Mirage, which has 36,000 rooms in Las Vegas, urges managers of smaller conventions to book rooms during slow periods and commit to multi-year deals.

"It helps us fill the gaps," Feldman said.

Convention traffic in 2006 increased 2.3 percent, to 6.3 million visitors, with a non-gaming economic impact of $8.2 billion, up 7.6 percent from 2005.

Feldman said maintaining high occupancy is a challenge every year as other destinations seek to divert visitors who would otherwise go to Las Vegas.

"There isn't anyone out there willing to cede business to us," Feldman said.

Occupancy rates in Las Vegas were 94.6 percent on weekends and 87.6 percent midweek. The overall occupancy rate has increased steadily since 2001, when it was 84.7 percent.

"There is not another market in the country that comes close" to Las Vegas, Feldman said of the rate.

The next closest market reported by the authority was Oahu, Hawaii, at 83.1 percent, followed by New York City at 82.8 percent.

High occupancy rates in 2006 also allowed hotels to charge more money for rooms. The average daily room rate rose $17 to $120. That was well below the $240 average room rate in New York City but higher than the $101 rate in Orlando, Fla. The average rate for the top 25 markets in the United States was $119, the convention and visitors authority reported.

"It is a bad thing for the customer," said Anthony Curtis of the room rate increase. "I guess it is a good thing for the operators."

Curtis is president of LasVegasAdvisor.com. In a survey published in December, Curtis reported the number of casinos with rates below $40 dropped to 25 from 30 the year before.

"They are squeezing (as much) out of the room product as they can," Curtis said.

He expects room rates to continue to rise as long as demand increases and hotel companies improve their techniques for rate yielding, a math-based pricing structure that fluctuates with demand. It is a concept similar to what airlines use to determine ticket prices.

Visitation to Laughlin in 2006 dropped 14.4 percent to 3.3 million in 2006 but daily room rates and gaming revenue there increased. In Mesquite, visitation increased 1.8 percent to 1.6 million. The average Mesquite room rate increased 51.3 percent to $64.81.

Closures of six large hotels took 3,901 rooms off the Las Vegas market during the year. The largest shutdowns were the Stardust on the Strip with 1,552 rooms and Lady Luck downtown with 743 rooms, the authority reported.

The closures were offset by 3,320 new rooms added to the market during the year, including the Red Rock Resort in Summerlin with 414 rooms. The largest addition to the market was 614 rooms at the South Point on the far South Strip.

The authority predicts Las Vegas will add 5,010 hotel rooms in 2007 and by 2010 will have about 171,000 rooms. The projected number of visitors in 2007 is 39.3 million.

The report by the governor's transition team said room tax collections should exceed $200 million in 2006 and are expected to grow with the opening of new hotels over the next few years. The panel, which was headed by Las Vegas Sands Corp. President Bill Weidner, questioned how the room taxes are being used by the convention authority.

"The total amount of private convention and exhibition space now exceeds that space subsidized by the room tax," the report stated. "Private advertising and promotional activities cumulatively exceeds public promotion by a large multiple. Should we now re-evaluate the need for the LVCVA and its activities and should the room tax be eliminated or rolled back?"

Review-Journal writer Howard Stutz contributed to this report.