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Conventions Fuel Strip Room-Rate Rise

LAS VEGAS -- Las Vegas looks like it will be hot, hot, hot in January, thanks to booming convention business and the opening of the Mandalay Bay Convention Center Jan. 3.

"With the opening of Mandalay Bay's convention facility, Las Vegas continues to bolster its reputation as the premier convention destination in the Western United States," said Bear, Stearns & Co. analyst Jason Ader.

Three major conventions at the Las Vegas Convention Center dominate the month.

The biggest and best known is the International Consumer Electronics Show starting Jan. 9 with an expected 110,000 attendees, up 10 percent from 2002.

Following a traditionally dormant week, the week of Jan. 20 will bring in the Sporting Goods Manufacturers Association Convention with an expected 81,000 attendees and the National Association of Homebuilders with 75,000 attendees.

The dormant week of Jan. 13 sandwiched between the two super-convention weeks this year will host 34 conventions with 32,000 attendees expected, according to data compiled by Bear, Stearns.

During the same period in 2002, total convention attendance was 13,000.

The largest event during the Jan. 13 week is the Promotional Products Association International Show with an expected 20,000 attendees. It will be held at Mandalay Bay's new convention center Jan. 13 to Jan. 17.

"It looks like Mandalay's convention center is drawing new shows to the Strip from other convention cities and increasing the Strip share of the North American market," said Joe Greff, spokesman for Fulcrum Global Partners, an independent Wall Street broker, confirmed that

"We're pretty enthusiastic about the level of convention activity on the Strip in the first nine months of 2003 and it looks like we're off to a solid start," Greff said.

The new Mandalay convention center is fully booked with five conventions and trade shows spread out over the entire month, boosting occupancy and room rates at Mandalay Bay, Luxor and Excalibur, said Mandalay Resort Group Senior Vice President John Marz..

"We expect a great January with conventions and trade shows," he said.

Almost 40 percent of the rooms at Mandalay Bay will be taken by conventions in January, 10 percent of Luxor rooms and 5 percent of Excalibur rooms, Marz said.

Mandalay Resort Group has posted an average, mid-January weekday rate $113, up 8 percent compared with the year before and up 6 percent from pre-Sept. 11, 2001, the only increase for the period among the big three Las Vegas operators, according to Bear, Stearns data.

"I think our convention center is going to be taking business from other convention cities around the country," he said.

"Anytime we can take business out of another market and bring it to Las Vegas is going to be a big help for the market," Marz said.

Other trade shows during the week will be held at the Riviera Hotel, the Venetian, the Las Vegas Hilton and Bally's Las Vegas.

Major operators including Mandalay, MGM Mirage and Park Place Entertainment Corp., however, all posted double-digit weekend rate increases during mid-January.

"Like much of the rest of the Las Vegas market, we're looking at strong convention business in January both in terms of occupancy and rates," said Park Place Spokesman Robert Stewart.

"It looks to us as if Las Vegas in general will benefit from stronger convention business in 2003," he said.

Analysts are cautiously optimistic about the first quarter of 2003 in terms of convention business and the support that offers hotel occupancy and room rates.

Convention business "typically picks up after the holidays and the New Year," said Brian Gordon, spokesman for Applied Analysis, a Las Vegas-based financial consulting company.

"Convention visitors usually end up paying a premium (for their rooms). It's the same as the airline industry where business travelers usually pay a premium," Gordon said.

At Bear, Stearns, Ader said: "Overall, we believe that during the first quarter (of 2003), while economic issues and international conflict loom, convention business will play an even more important role for Strip properties (than is traditionally the case)."

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