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Best of Benjamin Spillman
Benjamin Spillman
 

Nevada at work: Exec aims to keep people loving Las Vegas

8 July 2008

LAS VEGAS, Nevada -- The lords of Las Vegas have built and imploded the Strip three times in the past 50 years.

Through it all -- the mob reign, the Howard Hughes revolution, the rise of the megaresorts -- Rossi Ralenkotter had a front-row seat.

Ralenkotter, born in Covington, Ky., moved to Las Vegas with his family at age 4 in 1951.

The family moved to the desert so his dad could work as a craps dealer at the new Sands Hotel, home of the Rat Pack and an icon in Las Vegas history.

Eventually Ralenkotter grew up and embarked on his own Las Vegas career. In 1973, he got a job doing market research for the Las Vegas Convention and Visitors Authority.

He's still with the authority today, only now he is the president and chief executive officer. Like Las Vegas, which for 14 years has been the No. 1 convention location in North America, the authority has grown in size and scope. Today it has a budget of about $280 million and is developing an $893 million remodeling of the Las Vegas Convention Center.

While the authority has contributed to the increase in convention business and developed the ubiquitous "What happens here, stays here," slogan, it has also hit a few bumps.

It is fending off a challenge from leaders of Las Vegas Sands Corp., owners of The Venetian and Palazzo hotel-casinos on the site where Ralenkotter's dad dealt craps for 36 years, who want to divert room tax money away from the authority and have suggested privatizing the convention center.

Question: Did the authority, and Las Vegas, evolve by design or were outside forces at work?

Answer: Two things happened that probably changed the direction. One was the energy crunch of the 1970s. When that happened, we needed to have more information into the habits of our travelers. Then the legalization of gaming in Atlantic City. All of a sudden Nevada had competition. If you look at some of the stories that were written at that time, there was a consensus by some people that Atlantic City was going to take all of the business that was coming to Las Vegas from east of the Mississippi.

Question: Was there one moment when the convention industry really took off in Las Vegas?

Answer: We landed the homebuilders convention, which was the big trade show that was the breakthrough for us. In those days (1979), the homebuilders convention was almost like a political convention. Each of the states voted. You had to go and give the pitch for your city to get the convention.

Question: Was there resistance among potential convention customers who were wary of Las Vegas?

Answer: There was a resistance because they didn't think they could get their business accomplished while they were in Las Vegas. We had to dispel that. We did research on the number of hours convention delegates spend on the trade show floor, the increased attendance among exhibitors and delegates.

Question: How did the authority branch out from convention sales and into the major marketing operation it is today?

Answer: We went from being a sales organization in the '70s and '80s to being a marketing agency in the '90s, and now we are a brand marketing organization. The travel convention industry is one of the most competitive in the world. We don't have a product you put on a shelf. If a room isn't full you lose that revenue. If your convention facility is empty for a week you are not generating money. For us to be able to compete with more rooms than anybody else we had to be smarter and faster.

Question: How do you impress that on staff?

Answer: We have a pay-for-performance program here. Each of the salespeople puts together a set number of goals at the beginning of each year. They have targets to meet and ways to exceed those targets and they are compensated for that.

Question: It is tough to put a dollar value on marketing? How do you demonstrate relevance?

Answer: A good example is our partnership with McCarran (International Airport). We are working on a list of places to go after for international carriers. The success of us working with McCarran is the reason Virgin Atlantic is flying to Las Vegas. It took us eight to nine years to develop the relationships and convince (airline founder) Richard Branson it can be profitable to fly direct from London to Las Vegas.

The "What happens here, stays here," campaign. That was a very aggressive stand on our part.

Question: Can you explain why that slogan became ubiquitous?

Answer: The one thing that makes Las Vegas successful is we have a product and a price point for everyone. But when you looked at the essence of the brand it was all about adult freedom. We wanted to come up with a campaign that reflected that.

Question: Has the slogan gotten stale? How do you get past it?

Answer: We continue to do research in the marketplace with customers and non- customers to see if it is still effective. It still is.

A couple of things we have done along the way, "Your Vegas is Showing," is kind of a secondary campaign. Because of what is happening in the economy right now, the "Vegas Right Now" is going on. At some point, if the research shows we need a new message, we will go in another direction. But right now, this is working.

Question: The authority has pushed to increase international visitation. What are the challenges?

Answer: We have been running up against the unfriendly atmosphere that is perceived by international visitors. We are not welcoming people. There is a fine line between homeland security and welcoming your visitors. We have to break down some of those barriers. Our product is the best product out there. It is the most exciting city in the world. We just need to communicate that to international markets.

Question: There are a lot of references on the Strip and downtown to pornography and prostitution. Is there concern that the destination may become too seedy for the customers' tastes?

Answer: We have always been an adult destination, marketed to adults. This is the place for adults to take their vacations. We have been consistently working with the county trying to get the people handing out stuff on the streets not to be able to do that. But it is part of the marketplace.

Question: What current challenges could be long-term problems for the hospitality industry?

Answer: You have got slowing of the economy, the foreclosure situation, and increased prices for jet fuel and gasoline. It is impacting people's budgets. We have to see how we can stimulate demand in that kind of marketplace.

Question: What about the movement within state government endorsed by Sheldon Adelson at Las Vegas Sands Corp. to divert room tax money away from the authority?

Answer: If you look at the distribution of room tax now, you have about 53 percent going to the community already and the other 47 percent being used by us. That 53 percent, it is for road construction, schools, parks and recreation. Our formula has worked for almost 50 years. It is a formula that other destinations want to copy. We need to go out and effectively tell our story and tell the economic benefits of the utilization of the room tax.

Question: Sands accuses the publicly funded authority of undercutting rates at private convention centers like Sands Expo and Convention Center. What's your response?

Answer: We are not competing with the Sands or Mandalay Bay for conventions. We are competing with Los Angeles, Chicago, New York and Orlando, Fla. That is how we price our building. Our pricing model has been in existence since 1959. They price those based on the type of return on investment they need to get. They can charge more than us, the same as us, less than we do.