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Gaming Guru

Chris Jones
 

Las Vegas Tourism Turns Around

3 March 2005

LAS VEGAS -- After decades of struggling to overcome visitors' collective apathy and apprehension, tourism in downtown Las Vegas may have finally turned a corner in 2004.

Last year, approximately 21.3 million visitors, or 57 percent of the valley's nearly 37.4 million guests, said their stay included a stop downtown, preliminary data the Review-Journal obtained Wednesday from the Las Vegas Convention and Visitors Authority show.

That's well above the prior year's 18.1 million downtown visitors, or 51 percent of 2003's citywide total of nearly 35.6 million guests tracked by the convention authority.

While those gains did not provide a similar boost in downtown casino play, the apparent surge in visitors is welcome news for a beleaguered area whose tourism industry had in recent years envied the success of rival hotel-casinos on Clark County's nearby Strip, downtown sources said Wednesday.

"There's a renewed confidence in the product," said Joe Schillaci, president and chief executive officer of the Fremont Street Experience. "The things that we did cosmetically make us more appealing. But even more importantly, we really kept the place safe and secure."

Fremont Street Experience, whose four-block-long elevated video canopy has been a downtown staple since December 1995, in June unveiled a $17 million upgrade that brought better pictures and sound to its shows.

The project was partially funded by a $7 million grant from the convention authority, which collects room taxes from visitors to promote additional travel to the city.

Downtown's latest visitor totals were obtained through ongoing convention authority surveys that did not ask whether Fremont Street Experience was what lured travelers to downtown in 2004.

But representatives of several downtown properties said they're convinced improvements to the canopy were the key to the resurgence.

"We've found that people that do come downtown like it," said Don Snyder, president of Boyd Gaming Corp. and chairman of the Fremont Street Experience board. "And that (upgrade) gave people a new reason to come."

Downtown also benefited from Southern Nevada's unprecedented popularity, as evidenced by last year's record 37.4 million visitors.

It also capitalized on the buzz brought on by new projects such as World Market Center and an adjacent outlet mall, and changes in ownership at several downtown casino properties, said Stephen Crystal, whose Barrick Gaming Corp. recently acquired six older hotel-casinos on or near Fremont Street.

Now that the visitors are returning, new resorts will quickly follow, Crystal said.

"The demand is there; the product is not, but I think that's going to be the next wave," said Crystal, Barrick Gaming's president and co-founder.

Barrick is about 10 months away from beginning construction of an expanded Plaza, and redevelopment of the Nevada Hotel and Queen of Hearts sites, Crystal added.

Separately, Vegas.com spokeswoman Pamela Johnston said Wednesday customers of her online booking service have recently expressed more interest in downtown properties, though she could not give specific figures comparing 2003 to last year.

"We sold so little downtown in '03 there really wasn't much to compare to," Johnston said.

Despite drawing more visitors, downtown casinos failed to cash in last year. State gaming revenue figures released last month show casinos there won nearly $663.3 million last year, up just 0.8 percent from the prior year's win of nearly $658 million.

Both Crystal and Schillaci suggested the minor gain could be partially traced to last year's temporary closure of Binion's Horseshoe; the ongoing shutdown of the Castaways on Boulder Highway; and the Golden Nugget's unspectacular attempt to attract high rollers.

Schillaci added his role is bringing more visitors to the area -- getting them to gamble is up to casino operators.

"I look at myself as a gold miner," he said. "I have to do enough due diligence to know that I'm digging for the ore in the right places.

"But I dump the ore on the mall, and those guys have to find the nuggets."

Jake Fuller, a gaming and lodging analyst with San Francisco-based Thomas Weisel Partners, said Wednesday any tourist-dependent area could have worse problems than 3.2 million additional visitors -- even if those added guests were pinching pennies.

"Maybe their budget while they're there has gone down, which could be a function of economic factors or various other things," Fuller said. "But as long as you're still generating the traffic, hopefully you'll be able to increase that budget again."

Boyd Gaming Corp.'s downtown properties -- the California Hotel, Fremont and Main Street Station -- last year reported cash flow of $38.7 million, down 4.4 percent from the prior year's $40.5 million. Snyder said that dip was due to increased jet fuel costs on charter flights to and from Hawaii, a prime feeder for clients of the California Hotel.

Crystal said Barrick's revenue increased by more than 10 percent last year. The privately held company did not disclose specific amounts, however.

Schillaci hopes to post better returns in 2005, when downtown's popular "Vintage Vegas" marketing campaign will have an entire year to reach consumers.

Fremont Street's mall was disrupted by construction early last year, an interruption that won't recur anytime soon, and World Market Center expects to draw about 40,000 people downtown for its first furniture market in July.