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Benjamin Spillman

Vegas boosters see dark times ahead

19 November 2008

LAS VEGAS, Nevada -- Like addicts at rock bottom, even the sunniest tourism boosters admit Las Vegas has a problem.

Now it's time to start taking steps on the road to recovery.

That was the sober sentiment Tuesday during the monthly gathering of the Las Vegas Convention and Visitors Authority.

The agency that's loath to acknowledge tumult in the tourism business hauled out a series of downward indicators for the Las Vegas economy.

Terry Jicinsky, the authority's marketing vice president, projected Las Vegas would attract 2 percent to 3 percent fewer visitors in 2008 than 2007, the first such decrease since 2001 and just the third since 1970.

Brenda Siddall, the authority's vice president of finance, reported declines in tax revenue derived from room taxes would take a $20 million bite out of the agency's 2009 fiscal year budget.

Even a progress report on upgrades to the Las Vegas Convention Center was tempered by warnings from a board member to make sure the project is flexible enough to adapt to financial conditions.

"Southern Nevada's consumer spending- and construction-dependent economy has felt the full force of this downturn," consultant Jeremy Aguero told the authority board, made up of local government officials and executives from big gambling companies.

Aguero, a principal for the Las Vegas economics research firm Applied Analysis, delivered the first of several reports in an "Economic Impact Series" commissioned by the authority.

The report, titled "Tax Contributions of Southern Nevada Visitors," laid out the ways tourists and conventioneers carry much of the state's tax burden.

In 2007 the report stated visitors to Las Vegas spent $28 billion, an amount that represents 22 percent of Nevada's total economic output.

The spending generated $1.6 billion in state and local taxes. Broken down, Aguero said the typical visitor spends $715 dollars with $41 going to taxes.

"Nevada's tax system is designed to tax nearly everything a visitor does," he said.

The convention and visitors authority alone generated $282 million in revenue in the most recent fiscal year, about 80 percent from hotel room taxes and most of the rest from convention center operations.

The tax breakdown served as a point of emphasis to the authority board and the broader community that Nevada's fate remains entwined with that of the resort industry -- and that it isn't necessarily a bad thing.

"These folks demand relatively little in terms of services and provide relatively big benefits in terms of tax payments," Aguero said.

In order to keep those visitors -- and their wallets -- coming to Nevada while the national economy falters, Jicinsky outlined fourth-quarter marketing plans.

The plans come as the national Consumer Confidence Index has shrunk from 110.2 in February 2007 to just 38 in October, an all-time record low. In October 2001, a month after the 9-11 attacks, it was 85.4.

Against that backdrop, Jicinsky outlined a $2 million marketing campaign in major domestic source markets for Las Vegas and outreach to three international markets: London, Brazil and China.

The domestic programs target Phoenix, Denver, Salt Lake City and four markets in California.

They include sales calls, incentives for travel agents to book Las Vegas, tradeshow promotions and campaigns pushing Las Vegas as a destination for holiday shopping and New Year's Eve revelry.

Board member Chuck Bowling, executive vice president of Mandalay Bay, said he is confident Las Vegas will regain its footing at the end of the recession and maintain its place on the top of the hospitality food chain.

"One of the most important things is, we don't overreact," Bowling said.