4th Annual Las Vegas Leadership Roundtable

SUCCESSFUL MEETINGS: Welcome to the Fourth Annual Las Vegas Leadership Roundtable. We always start these roundtables with the same question: How is the meetings industry doing in Las Vegas, and what is its overall state?

MICHAEL MASSARI: It's really been a rollercoaster for us the last four years or so. I mean, we had a really substantial business that was doing really well, and then all of a sudden it fell off of a cliff in the fall of 2008, and we saw a 30-percent decline. We've talked about that ad nauseum over the years. And then in summer 2010, things really rebounded and we recovered almost all the volume losses that we saw in the fall of '08, and a lot of the pricing losses that we saw. And then the beginning of this year it's just bouncing along at that new level. So it's been a real dogfight, I guess, is the best way to think about it, but just up and down, a real rollercoaster. That's what we're seeing.

CHRIS MEYER: Meetings-wise, there's a lot of activity out there, more than we've seen in a number of years. And everybody seems to have a very distinct competitive field that they're playing in. Which, from a planner's perspective, is a good thing. But this year started off very, very strong. We had our usual dip in the summer. And we've come back in the fall period. As we look forward into the next year, it looks really, really strong.

FLETCH BRUNELLE: When you take a look at the latter part of this year - and we see this every four years with the presidential election - there is a little bit of uncertainty in business. So from that perspective, the last-minute business hasn't come in as strongly this year. We believe once there is certainty in the marketplace, when the election is done - whoever wins the election - there will be some certainty in business. So when we get into 2013, we're going to feel it quite well. But right now, 2013 is looking extremely good.

BRIAN KEENAN: It's been kind of a struggle to get back from 2009 when everything went downhill, but we're starting to see some good signs for '13 and '14 definitely.

DAVID SUKALA: Same thing with us. We're rebounding well in the fourth quarter, but it seems like everything is super short term. Just this morning, I looked at two RFPs that came through Cvent and Starcite for 1,200 and 1,400 attendees for October and November of this year.

ERIC BELLO: It's a competitive landscape, especially for the big-box shows. I think of groups like the CTIA Wireless Show, which New Orleans won a few years ago because they were able to offer five great concessions that we were unable to offer aggressive concession strategy. And you see that in the bigger convention centers, like McCormick in Chicago and also Orlando and across the United States with the hotels. The Gaylord properties continue to be competitive with us on big boxes.

CHANDRA ALLISON: In spite of that competition, we've seen rates getting stronger and RevPAR going up quite a bit. So, yeah, all indications are that the meetings industry is getting stronger.

MIKE DOMINGUEZ: What's encouraging for us is, as a company [MGM Resorts International], we're going to get back to 2008 room levels for convention business going into next year. And it's exciting to see that we're getting back to that type of number as far as volume. The further we get away from 2010, the stronger that starts to look and the pace starts to look better. But I think it's important when you're talking about competitive cities, that in the top 25 cities, when you look at the "[2012 Travel Click] North American Hospitality Review," we're finally seeing booking pace expand.

That kind of compression will bode well for Vegas, you know, once it settles. We've been looking at that data for the last two and a half years, and we could never see that kind of trend outside of 90 days. And then, to now see it trend for 12 to 18 months, it means thatmeeting planners' booking windows are expanding, and it's probably because they're being told "no."

And the one thing we saw is tightening, when I looked at the data - and it's echoing what Fletch talked about - we do think it's going to open up once the election is over. There's $2 trillion sitting on the sidelines in corporate America waiting to be spent. But I think when we saw a slowdown this summer, it was after the Q2 earnings reports. This recovery has all been driven by efficiency and not by revenue growth in corporate America, and we finally felt that in June because you can only grow it so far from efficiencies. And I think that's been the cause of the slowdown toward the end of the year.

BELLO: You're right. I don't care whether it's here or any other of the top cities that you've got in the United States; they're beginning to look to extend that booking cycle. So they are booking a little bit further out.

DOMINGUEZ: The media, especially in our industry, hasn't talked enough about the fact that we're at record demands in North America with no new supply. There's no new inventory coming in, and that's why rates are starting to push, and that's why the booking windows are starting to expand.

MASSARI: And I think that one of the things that's driving that all-time high demand is this whole notion that all the meeting planners who went through this downturn really came out of it on the back end, saying, "If I want my company to grow, if I'm going to launch new products, if I'm going to train my sales organization, if I'm going to raise my stock price or increase membership in my organization - whatever it is - I'm going to have to do it on the back of the face-to-face meetings. And that's a good way to spend my marketing dollars. And I learned that, in part, because I took it away for 18 months, and my business did not do well, and my competitors that did not take it away did better." And so you have a whole generation of meeting planners who feel really confident about why they have meetings, when they have them, and whom they invite. I think that's one of the things that is really driving that demand.

ALLISON: I think, to your point, it's also that a lot of the C-suite executives now support those initiatives. The meeting planners have more confidence in what they're saying to their executives because they've seen exactly what you're saying. They saw that downturn, and they saw what impact it made to their revenues for their organizations. So it's really helped them to be more supportive of our industry's role. 

DOMINGUEZ: How long, with MPI [Meeting Planners International], have we been talking about understanding our seat at the table and the importance of face-to-face meetings to the overall objective? You know, I think this recession actually helped put that in focus for a lot of companies, and that's really going to help us move forward.

MASSARI: Well, what I think is interesting - and this is probably blasphemous for me to say - we entered this whole period talking about return on investment. And I believe that has become less important now than it was four years ago because four years ago we were trying to prove a point.

The point we were trying to prove got proven clearly when companies didn't havemeetings. So to be able to say this is the specific ROI and to have an agreed-to industry formula, that's less important than it was before because everybody agrees, from the C-suite down, that if we're going to grow, we're going to do it on the back of face-to-face meetings.

Returning Markets

SUCCESSFUL MEETINGS: Are there certain segments of the meetings market that are returning more strongly?

DOMINGUEZ: Well, it's financial and insurance, and they're the ones that fell off the cliff. For a couple of years, there just was nothing there.

MEYER: Automotive is strong, technology is strong, healthcare is strong. I was coming in from a business trip on Saturday, and across the aisle from me on the plane were two automobile dealers; one was from Cody, WY, the other was from Orlando, FL, and they were actually attending two different automobile dealer meetings that are going on right now in the destination. And there is also a Toyota meeting going on here as well. We haven't seen that kind of activity in a long time.

BELLO: A hefty percentage of our business is still IT related. When you have products that are complex or that require education and demonstration, they lend themselves to these face-to-face meetings. Frankly, other types of marketing can't reach your particular target as effectively as the face-to-face meeting.

There are two types of technology in companies today. There are those traditional types, and they're still having big product launches and national sales meetings, and you've got a lot of immature technology companies that are only now seeing the benefit of face-to-face events.

DOMINGUEZ: To add to the pharma piece of it, what's driving meetings among the traditional companies has more to do with the expiring patents on the drugs that have been out there, so they won't have as great a need for those sales meetings. But if you look at the pipeline and what's already been FDA approved for the next five to six years, the interesting part is that you're going to have companies that we've never heard of that are going to be driving a lot of those sales meetings.

We're seeing the same thing in the pharma market that Eric is seeing in the technology area. The companies who produce the generic versions of drugs like Lipitor or Viagra that are now coming into the market are going to be the larger players, at least for the next few years, as they take away a share from the major companies. And if you've been reading news on the pharma industry recently, new drugs aren't getting approved. The traditional companies have  experienced a lot of failures.

ALLISON: Well, and I think as healthcare reform is changing, then medical, IT, pharmaceutical, and government meetings will all be intertwining. We're seeing a lot of movement in the healthcare market and we've been capturing a lot of business because healthcare reform is huge, and it's coming down the pipeline, and there's just so much around that. 

Perception Issues

SUCCESSFUL MEETINGS: Comparing 2012 to the end of 2008, it seems that Las Vegas is in a much stronger position to deal with its perception issues than it had been before. We had the GSA scandal earlier in the year, and it seemed like that really didn't land anywhere near as badly as the AIG scandal did. Can any of you just talk about the position Las Vegas is in right now to weather those types of incidents when they come up?

MASSARI: It's not just that Las Vegas is stronger - the industry is stronger. We're all better, and we're smarter. You know, we figured out better ways to do things that were caused by this downturn. I think we have better people doing things in a better way. There is no question that we're stronger.

In terms of the GSA relative to AIG, our position on this is that we want to be in the meetings business because we're meetings professionals. We want to host meetings where people are doing very productive activities, where they're growing their business in some way, shape, or form. I don't want to be in the business of hosting boondoggles. If you want to have meetings that aren't doing those things, if you're not going to be responsible and thoughtful about your company's expenses or the government's expenses, then have them somewhere else.

DOMINGUEZ: The GSA incident is unfortunate. But to me, what's really unfortunate is that our government once again overreacted to the actions of one individual or one individual agency. The issue with GSA went much further than the meeting itself. They had issues, within that department, of corruption that they found during the investigation. The meeting was just the symptom that everybody saw, and that was unfortunate. But the legislation that's been put through by our government is an overreaction and we haven't been talking enough about it as an industry.

For those destinations that really rely on government business, it's going to hit them hard because there's going to be a drop-off of almost a third in government travel when it's all said and done. The limitations that came through that legislation are going to restrict how many employees from a certain agency can even go to a conference. So associations are going to be impacted by it down the road. It's going to have far-reaching implications way beyond Vegas.

The Economy Factor

SUCCESSFUL MEETINGS: Let's talk a little bit about the economy. We have been in the midst of a slow recovery, but there are some troubling things going on right now, such as the crisis in Europe and the disappointing job reports. What is the sense among your clients in terms of how the economy is doing, and what effect is that having on their decision-making processes?

DOMINGUEZ: Europe is the piece that keeps coming up, and I don't know if we pay enough attention to it in the U.S. But the biggest challenge with Europe is that for so many of our Fortune 500 companies, their revenue comes from Europe, and they're starting to now feel it as Europe continues to slow down. That's a concern, like you saw in the earnings report in Q2. McDonald's is having a down report. When you got down and nailed through it, it was all driven by Europe - that's where they started to see the decline. That's what scares me because as that starts to sneak into the U.S., and their earnings continue to decline, you're going to again get a tightening of those dollars.

BELLO: But even during the bad times, companies still need to carry out their meetings, they still need to be interested in trade shows, sales meetings, and product launches. So, even though the economy might be struggling in other parts of the world, I can't say that's going to prevent organizations from holding meetings in Las Vegas.

MEYER: I'll take a whack at this from a different angle. I love economists because it's a great profession where you have lots of scientific data and you're never right about anything. So what I rely upon is what I'm hearing from the folks around this table. What we do as an organization that's responsible for promoting this unbelievable, greatest place on Earth, is that we look for markets for our partners. We have got our foot on the gas pedal in the global marketplace. We are out there promoting MICE business like there's no tomorrow. We're the dominant player in the globe when it comes to convention business. Nobody does more than the U.S. But there is a lot of opportunity for us overseas, and we are engaging that opportunity more than any other destination in the 50 states.

DOMINGUEZ: I think, sometimes, the disconnect is that if meeting demand starts to drop in North America those top 25 markets start to get competitive with us again and it's hard for us to move our rate, which all of us are trying to do. That's the impact I look at: What's happening in the rest of North America, outside of Vegas? Because the group rate just declined for the first time in nine months in North America. So here's the big question: Is it a trend, is it a blip, is it some of the business we booked three years ago in a different timeframe? If it starts to slow down, it starts to be a concern.

Buyers vs. Sellers

SUCCESSFUL MEETINGS: Are we making the shift from the buyers' market to the sellers' market? But with all these variables, is that too broad a question? I mean, can you actually ever really say, we've made the shift?

DOMINGUEZ: We need to rephrase it, and maybe you guys in the media could be the ones to lead this charge and change the dialogue. When I hear "sellers' market" and "buyers' market," it puts us in this competitive environment, and that's not what we are about. We're good at being partners and, candidly, it's the economy and the market conditions that drive pricing. That's all it is. It's not about sellers or buyers. It's about the economic conditions saying, "I can charge more for it or I can't." It's as simple as that.

As an industry, we have not gotten there. It's interesting because I was at the ASAE [American Society of Association Executives Annual Meeting] this year, and we had these roundtables with meeting planners. Every issue they brought up - and it didn't matter what it was - came down to one thing. There was a lack of trust in our industry between the planners and suppliers.

I personally think it's because we don't have a business dialogue often enough with them to really say, "Here's how we operate; here are the business reasons of why I'm charging you more." But we don't help it because every publication in our industry talks about buyers and sellers. They put us against each other. It's not what the industry truly is.

ALLISON: We have to understand our customers' challenges, objectives, what they're doing within the economy, and work together and have some tough conversations. We need to be able to share with them what's important to us, and understand what's important to them, and to have the business conversation to find a solution for them, whether it's an off-peak period or a peak period. We need to help drive that conversation and find a good fit for them.

MASSARI: I'll jump on the vernacular bandwagon here and suggest also that we don't call it buyers and sellers. I'll offer another reason why we don't do that. We don't work in an industry where we do 10 million transactions at $10. We work in an industry where we do 10 transactions at $1 million each, or however the math works out. So we position highly talented, well-compensated salespeople to work with an individual customer, and we think about that meeting one at a time. We try to put together a package where the pricing and the overall package components make sense for that individual meeting planner and it's a customized solution. I think we all do that, and I think we all do that very, very well. It's not a buyers' market or a sellers' market in that situation. It's a partnership and we sit down with them to figure out, "How I can get you what you want, and how we can also do that at a price and an inventory usage that makes sense for me?" And that doesn't change from January to July. That doesn't change from '07 to '09.

DOMINGUEZ: I think that one of the tragedies of this recession has been that we've lost, for lack of a better term, the middle class of meeting planners and the middle class of suppliers. We tend to have very senior and very novice, and there's nothing in the middle, and it screams for a lot more training and education. From our perspective, I think we have a responsibility as suppliers to be better partners in educating the customer - third party or not - educating them about how we should do it, and this is what is appropriate. That responsibility, at some point, falls back on us. It's nobody's fault; it's just that the industry has shifted through this cycle.

What I do find is the people who used to teach, they're now too busy being day traders at the hotel. It's the reality of our business, but we don't have dedicated people that are mentoring and teaching daily, and we have so much youth in our industry right now. I hear it from the planners, and my comment to them always is: We see the same thing from the planner side. You know, the planners are talking about the suppliers they're dealing with. Well, we all have those planners that are planning a meeting and have never planned one in their life, and we're trying to educate them. So there's this huge gap, and I don't know where MPI falls in on that, or PCMA. But I do think we have a responsibility as a supplier community to start educating the meeting planning community and educating our younger suppliers.

New Sales Channels

SUCCESSFUL MEETINGS: Let's talk a little bit about the electronic RFP's [eRFPs] and the third-party meeting planners. How are they changing the game - both positively and negatively - and how are you adapting to this new landscape?

SUKALA: There's a lot of noise out there on both sides. One of the effects of the rise of the third parties is that it's made it harder for hotels to communicate to the end-user. Sometimes there is one, maybe two, possibly three parties involved as this communication process goes back and forth. So what the hotels agree to is not necessarily what the clients want. We try and put our best foot forward with the response to eRFPs but it seems like you only get one bite at the apple. It's really hard to come back and offer $10, $15, and $20 lower than your initial offer, which is usually your best offer.

DOMINGUEZ: I think there are multiple levels because what we're finding is that the meeting professionals are not the challenge we have. As I said earlier, there's such a large contingency of people who are planning meetings that have never planned a meeting, and they're sending eRFPs out to multiple hotels, multiple destinations. That's the challenge because we have not reached out to that community to educate them a little bit. I tell salespeople all the time: If you're waiting for the lead to turn into a relationship, you're too late. That's the piece that's missing in our industry because we have so many people that are sitting behind their desks and answering phone calls and answering emails, and think they're building relationships.

BELLO: You need to understand the clients' objectives, their products, who they're selling to. And then, from that you can start crafting a meetings solution.

MASSARI: Eric, I think that the whole point is around that approach. Almost exclusively, customers select facilities because they believe they have the best chance to achieve their objectives at that facility. And in the rare case that they don't, it's generally a mistake.

So the challenge is how we make sure that our salespeople are uncovering those objectives, and those needs, and those desires, and what they're trying to achieve from the end user, and the noise that's in between. So we welcome all the people in between to the dance. I think if they add value, they're beneficial to somebody throughout the process, often me.

But we still have to make sure that we're working hard to spend time with the end user so that we know what they're trying to accomplish because that's the only way that we're going to earn the business, and it's certainly the only way that we're going to get it back.

DOMINGUEZ: As an industry, we have to be a little more sophisticated about how we approach this because we've trained the consumer that they live in an on-demand society. So they can get what they want when they want it and how they want it. Yet we're trying to tell them: Okay, we want you to buy a little bit differently. It's not going to work. I mean, we're trying to educate the planner to say: Can we start with an RFI [Request for Information] rather than an RFP? So if you're looking at six different destinations and five hotels, can you just do rates, dates, and space? Then when we get serious, we'll go through filling out all the other templates because that's what takes so much time. Personally, I think we have to change our marketing models, and start putting some marketing expenses against it. Do I need to create a lead triage team that literally is going through these, not junior level, but going through these leads on a daily basis and knowing I'm turning down 60 percent of them?

So why not get the 40 percent to my salespeople that actually need to be working, and I'll take the 60 percent, and offer them alternate dates, and we'll go working through that? But I don't need to have my best salespeople turning down leads in a system that's just time-consuming.

ALLISON: But as demand becomes more constrained, some planners are just literally blasting out tons of emails to everywhere, just to get the availabilities so they can quickly get information back to the people who need to make the decisions. It becomes who gets to the lead first, and it doesn't help them narrow their decision and it doesn't help them be smart about making the decision that will help them achieve their goals. But we hear more and more about it because there's so much constrained demand now in the U.S. that it's just a mechanism for them to get rates, dates, and space.

SUCCESSFUL MEETINGS: How has the emergence of third-party planners changed the way you do your jobs? Is it a good thing, a bad thing, or both?

MEYER: From our perspective, we listen to all the folks who are sitting here as well as a wide swath of partners, and we make a very, very concerted effort to develop the relationship. That is the way we deploy our sales teams; it is all about putting the relationship first. That trumps everything.

DOMINGUEZ: When you say good or bad, I think the professional third parties that are out there, they are out there because they work very well with us, they partner well, they communicate, they're transparent. As long as that is what we're talking about, it's really good. When it gets bad is when we have third parties, at times, that aren't living up to the ethical standards that we would expect, or they're not being transparent with the information. That's when it becomes a challenge. But the large organizations, I think, are doing it very well.

Local Focus

SUCCESSFUL MEETINGS: Well, let's finish up with some local developments. It's been a couple of years now since there was a huge influx of new hotel inventory in the city. How has Las Vegas absorbed that inventory? What's changed for the better, and what's been more challenging?

BRUNELLE: No more hotels rooms are coming online for many years. That's good.

SUKALA: That's something that does sit in the back of my mind - that there are a whole lot of potential investors that are waiting to see what happens in Vegas. There are two projects on the shelf right now that could put another 70,000 rooms in the city. So you're always concerned with it.

MEYER: We're at 151,254 rooms right now. I don't think we need to worry too much about those projects at this point in time.

MASSARI: If these new projects cause us to get better at what we do, if they cause us to get smarter about who we are and train our teams better, I'm okay with it. But for now, I'll echo Fletch's sentiment, that if there were none, I wouldn't be unhappy about that. All the new projects we went through in the last few years caused us to get better, and it's competition that makes all that happen. So if it comes, it comes. If it doesn't, so be it. But it's the growth in the city that's caused us all to grow, and get better, and be stronger.

DOMINGUEZ: We just opened up a new international airport terminal. We're expecting international business to explode. If all of that happens, we'll need more rooms at some point. Not overnight, but at some point, and that'll be healthy. I think the other positive is that there's nothing going to be built nationally in the group space in North America for the next couple of years. The pipeline is starting to move, but there's nothing significant that's going to move the needle. I find that very encouraging because I think the latest estimates are 2015 when you'll start to see any kind of new development out there.

ALLISON: The increased inventory also brought new experiences that we didn't have before to the marketplace that has also been good for the destination.

BRUNELLE: The only thing that's going to change for the immediate future is reinvestment in existing product. We just finished a $70-million remodel of the Bellagio. The Bellagio Towers actually started in the middle of August. That's another $40 million reinvested in the rooms and suites there that will be done in December.

KEENAN: We're reinvesting in our property overall. We're spending about $160 million on our room renovations. That doesn't include the casino renovation, a brand-new nightclub, and the new Brad Garrett Comedy Club. There's just a lot of stuff going on at the property. So it's really about taking what you've got and making it better. Fine tuning it based on the topic.

MASSARI: Our project is The Linq, which we'll do here between The Flamingo right down on that drive. You've got the [550-foot observation] wheel on the back end, you've got restaurant development, you've got retail development, and you've got more attractions for people in the destination. All of this reallocation of capital toward existing assets is good for the destination overall. You can't just build another tower and call it a day. You have to be much more thoughtful and much smarter about it.

ALLISON: We're really reinvesting not only in our inventory from a room perspective, but we're reinvesting in our meeting space as well. Sands Expo Convention Center is getting a complete facelift that is huge for the destination as well as for the property. We've also hung our strategy on our entertainment. We recently announced a production of "Rock of Ages." So many people come to Las Vegas, time and time again, and if we don't continue to refresh our entertainment options, then we kind of take ourselves out of that marketplace. We've got that new strategy, whether it's limited engagements or long-term engagements, to try to attract those customers and keep our product fresh.

DOMINGUEZ: With Mandalay Bay, we're turning the renovation of the hotel into a reinvention by rebranding it as a Delano. It's not just reinvesting in it, it's recreating it, and giving it a sexy edge that was probably missing with the hotel. That's really exciting. Then you've got the new Cirque [du Soleil] show, "The Michael Jackson Immortal Tour" that will be starting in May, and I think we have an opportunity with that because we have the MPI World Education Congress here this summer. So we're going to have an opportunity to be able to showcase the destination again as far as what's new and what's exciting.

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