resident Barack Obama’s warning this month that companies receiving government bailout money “can’t go take a trip to Las Vegas or go down to the Super Bowl on the taxpayers’ dime” is causing more convention and meeting cancellations in the city, already hurt by the US recession, executives of the four biggest Las Vegas Strip casino owners said in interviews.
“It’s very anti-stimulus, it’s pro-recessionary, pro- unemployment,” Las Vegas Sands CEO Sheldon Adelson, the pioneer of Vegas conventions, said by telephone. “Insurance and financial services, auto companies, they’re getting a little spooked.” Goldman Sachs Group Inc., recipient of a us$ 10 billion government bailout package, moved a conference to the San Francisco Marriott from MGM Mirage’s Mandalay Bay casino in Las Vegas. American International Group Inc., Wells Fargo & Co. and Citigroup Inc.’s Primerica unit have also canceled events.
Goldman Sachs’s move means it’s “paying more, and paying twice for the same meeting,” said Mandalay Bay Executive VP Chuck Bowling. The investment bank’s cancellation charge was us$ 600,000, the New York Times reported. Bowling declined to comment on the cost.
“Companies right now are more willing to pay cancellation fees than to run the risk of attracting poisonous publicity,” said Geoff Freeman, a spokesman for US Travel Association, an industry group. “We’ve now gone beyond the economy. If they’re willing to pay the cancellation fee, they’re not saving any money.”
Senate Majority Leader Harry Reid said last week he’d been told by White House Chief of Staff Rahm Emanuel that the “the president’s criticism was aimed at the potential use of taxpayer funds for junkets and in no way reflects his thoughts about any one particular city,” according to the Times.
Congress on February 13 approved a us$ 787 billion economic- stimulus package Democrats say will save or create 3.5 million jobs and help pull the nation out of the worst recession in 70 years. Separate bailout packages included limits on executive pay and bonuses at companies receiving money.
“We’re in the throes of the trough for this industry right now; it is dire for a lot of these businesses,” Dennis Farrell, a debt analyst with Wachovia Capital Markets LLC in Charlotte, North Carolina, said today in a phone interview: “With Vegas, there’s a push back on conventions in that city right now. Some politicians are not helping the industry.”
Some companies are saying “the last thing we need or want is to come under scrutiny because we’ve hosted an event in a destination that is somehow viewed as being overly indulgent and not about serious business,” Wynn Las Vegas President Andrew Pascal said. Meetings account for as much as 25 % of Wynn’s revenue.
Instead of “making companies embarrassed” to bring employees together in a resort town, government officials should be encouraging them “to get together and really sit and strategize,” said Harrah’s Entertainment Inc. government relations chief Jan Jones, Las Vegas mayor from 1991 to 1999.
Business travel creates 2.5 million US jobs, including 1 million in meetings and events alone, US Travel Association said. The travel industry was forecast to lose about 450,000 jobs in 2008 and 2009 “before politicians found this to be a good political punching bag,” Freeman said. “How many jobs will they cost?”
Both Adelson and Wynn Resorts CEO Steve Wynn were supporters of John McCain’s bid for president. Visits to Las Vegas, which hosts more conventions than any other U.S. city, will fall as much as 4 percent this year, said Rossi Ralenkotter, CEO of the Las Vegas Convention & Visitors Authority. The number of seats available on commercial flights remains almost 15 percent less than a year ago.
Billionaire Adelson, who made his fortune founding conventions including the Comdex computer expo, said he recognized Las Vegas’ potential in 1979 when he held a convention there and attendance jumped 50 %. The city invested billions of dollars to build facilities and meeting space to fill its 140,000 hotel rooms on weekdays with corporate travelers, marketing itself as the most affordable and accessible destination.
Las Vegas has become the only place in the US with sufficient flight connections, exhibition and meeting space, hotel rooms and dining and entertainment options to accommodate the biggest industry events, resort executives say.
Even as the recession takes its toll, pushing gambling proceeds in the biggest US gaming center down a record 10.6 % last year, Las Vegas is still growing, with more than 13,000 new hotel rooms scheduled to open in 2009.
Wynn and its neighboring property Encore, opened in December, have 300,000 square feet of meeting space, and hotel rooms outfitted for business travelers. Las Vegas Sands’ Venetian and its adjoining Palazzo, opened in December 2007, have 7,100 suites, 330 meeting rooms and can seat 57,000 people in meetings and conventions, Adelson said.
“That’s more meeting rooms than most major U.S. cities have across all hotels,” he said. “They’re not holding these meetings simply because they’re all boondoggles. How does an automobile company introduce their new car to thousands of dealers? How do tech companies introduce their new products and explain how they work to their dealer network?”
Vegas’ outcry echoes similar pleas by hoteliers. Lawmakers are “killing” resorts with their criticisms, Loews Corp. CEO James Tisch said on Feb. 9. Marriott International Inc. CEO J.W. Marriott said jobs were being lost as companies fearing government scrutiny cancel functions. Hotel rooms “don’t all get filled up every day by people who are here just for leisure and fun,” Wynn’s Pascal said. “There’s serious business that gets conducted during the week and we’re pretty dependant on that.”