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Why Vegas courts China

11 February 2008

Las Vegas Sun

LAS VEGAS, Nevada -- The financial windfall that arrives with Chinese New Year — one of the most profitable and active periods of the year on the Strip — is only a fraction of what's in store for Las Vegas.

Chinese are destined to become, far and away, the dominant foreign tourists in Las Vegas, surpassing the number of visitors from any other country, based on estimates from the United Nations and elsewhere.

By one estimate, between 5 million and 15 million Chinese tourists will visit Las Vegas annually in the not-too-distant future. By comparison, Las Vegas currently plays host annually to about 40 million tourists, 6 million of whom are foreigners.

The reason for the expected influx: a ballooning upper class in China, its members' desire to travel (and gamble) and the easing of visa restrictions on Chinese entering the United States.

Gamblers keep playing their slots while members of the Lohan School of Shaolin perform a dragon dance Las Vegas Hilton casino Saturday. Casino gambling is illegal on mainland China but allowed in the nearby province of Macau. Casinos in Macau, where an Asian version of the Las Vegas Strip is taking shape, are expected to cultivate even more customers for Las Vegas.

"There's a lot of excitement about this. It's going to be huge for Las Vegas," said Bruce Bommarito, former director of Nevada's Commission on Tourism and vice president of international market development for the Travel Industry of America.

China now accounts for only 1 percent of visitors to the United States.

In 2006, the United States hosted 320,450 visitors from mainland China, a 19 percent increase from the previous year, according to the U.S. Commerce Department. Eleven other countries sent more tourists to the United States, but the flow of tourists from those countries is not increasing as rapidly as the flow from China.

Among those Chinese tourists in 2006, the Commerce Department estimates — based on in-flight surveys — that about 87,000 came to Las Vegas, constituting less than 5 percent of our foreign visitors.

And here's the number that will get casino bosses, travel agents, boutique owners, nightclub operators and cab drivers excited:

According to the U.N. World Tourism Organization, more than 100 million Chinese will travel abroad annually by 2020 — more tourists than from any other country.

The United Nations doesn't know how many of those tourists will travel to the United States — and Las Vegas. But based on historical data, the Las Vegas Convention and Visitors Authority estimates that Las Vegas — the top U.S. destination for foreign tourists — receives about 5 percent to 15 percent of a country's foreign travelers.

That suggests that between 5 million and 15 million Chinese visitors a year will descend on Las Vegas in a few years. By comparison, Las Vegas' top foreign market, Canada, delivered 1.4 million visitors to the city in 2006.

Even if the U.N. numbers are wildly off the mark, the number of Chinese tourists visiting Las Vegas is expected to increase by at least several hundred thousand annually, said Terry Jicinsky, senior vice president of marketing for the visitors authority.

Until now, the visitors authority has been spending money on plucking the low-hanging fruit — tourists from Canada, Mexico and Britain who make up 70 percent of foreign visitors to Las Vegas.

The agency plans to shift more of its newspaper and magazine ads to China, Jicinsky said, and target a new generation of tourists not seen here now.

Today's Chinese visitor is typically a business owner or a high-rolling gambler courted by casinos for holidays or special events, such as Chinese New Year or a title fight.

The new market: middle-class Chinese tourists who, like most others, want to do more than gamble or conduct business while they're here.

Consider that Chinese visitors spent, on average, more than $6,000 per trip to the United States in 2006, including airfare — more than visitors from any other country in the world, according to the Commerce Department. On average, Japanese visitors, known for a propensity to buy high-ticket items, spent about $4,300.

Jicinsky says that spending figure will likely go down as travel becomes more accessible to the masses.

In contrast, today's tourists from China "are newly rich and upper class who are traveling," Jicinsky said. "They tend to have higher (spending) expectations."

There is no doubting the trend of more travelers from China. The number has already increased by more than 50 percent in just two years, from 20 million in 2003 to 31 million in 2005, the United Nations reported in 2006.

And it's getting easier for them to travel to the United States. In December the Commerce Department signed a memorandum of understanding with the Chinese government that, among other things, allows the promotion in China of travel to the United States, even by promoting specific U.S. cities.

Nevada and Las Vegas tourism officials have made multiple visits to China to encourage travel here. That persistence paid off in 2004 when Nevada received the first license of any U.S. destination to market travel packages in China. The memorandum of understanding formalizes the arrangement and promises to simplify the visa process and increase the number of U.S. offices in China that process and issue visas.

The visa process can take from one to several months and requires being interviewed at one of five U.S. consulates in China to explain the purpose of the visit and to demonstrate intent to return to China.

Persuading Chinese to visit the United States means dispelling the misconception that the U.S. government discourages travel here, a common belief given the burdensome process demanded by U.S. officials, who are more concerned about illegal immigration than tourism.

The recent agreements with China help build new tourism bridges but more needs to be done, some gaming representatives say.

The visa process itself is an "unacceptable" hindrance for Chinese visitors, said MGM Mirage spokesman Alan Feldman, whose company is part of a multi-industry group lobbying Congress to ease the tourism path to the United States.

"We need a more broadly defined visa waiver program for countries that haven't produced a single terrorist or threat to the United States" in years, he said. "We've got to remain vigilant, but we're at a point now where the overreaction (to fears of terrorism) remains so strong that we're really cutting off our nose to spite our face."

A more streamlined visa process would also promote greater convention business at a time when China's economy is growing at a record pace, Feldman noted.

"If someone from Shanghai or Beijing were to read an article about something going on at the Las Vegas Convention Center, even if it were three months from now, they might not make it in time," he said.

Tourism inroads with China also are being made outside the State Department.

The Travel Industry Association hosted a first-ever gathering of tourism directors from China's 31 provinces with state tourism directors in the United States. Another meeting is scheduled for November.

There's little doubt that the face of the typical Las Vegas international tourist will dramatically change, said Bommarito of the travel industry trade group. He said he is getting "a call a day" from tourism officials and business people nationwide who have learned of these new agreements with China and are wondering how they will handle the influx of Chinese.

The former casino executive has at least one idea. He is assembling a how-to guide that will include everything from "what a bathroom sign looks like in Chinese to how to find translation guides for your menus."

In dealing with Chinese tourists, Las Vegas, he said, is "well ahead of the game."

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