Goldsmith: And often it's merely semantics. There are a lot of properties that wouldn't be considered resorts by the people around this table but have the word resort in their title and will not be considered by some groups as an acceptable meetings property, and yet there are a lot of luxury properties in the city that don't have the word resort in their title and because of that they could be considered.
Babilino: Customers have a much clearer agenda. They know what their objectives are because they have to justify to senior management what the return on investment will be. And that's a good thing.
Jordan Clark: The short-term effect of AIG was devastating, but what we're seeing this year despite a 26 percent increase in volume is the cancellations are still three times the norm, but going forward from booking space projections are extremely positive.
Richard Harper: There have always been one or two segments that have had concerns or aversions. And that's been an issue of lack of education. Those haven't changed, but the pace at which we were getting concerned calls saying, "This isn't the right destination for our company right now," those are gone. Most companies are back with the attitude that it is safe to go back in the water, if you will. We're seeing that in the lead volume and the quality of the customer that's starting to come back.
Bryan Gay: We're seeing leads come back from a lot of companies that wouldn't consider us a couple of years ago, so it's starting to come back for us too.
Babilino: I think what's happening is that customers are saying, "we took last year off, so we have to get back to meeting again. We have to do those sales meetings, we have to do those incentives, and we have to do those product launches." So much of those activities are all about the one-on-one, face-to face interaction that you just can't do with video. It's not as interactive and it's not as productive.
A New Attitude
SM: Has the recession and the AIG effect had a silver lining?
It's really elevated our game as a destination. The conversations we're having with the customers today are at a much higher level than it has ever been in the past. Historically it was a dates, rates, and space conversation. It's much deeper now. The call time is taking longer, but that's because we're asking smarter questions. We're helping prepare planners to walk into their board meetings and make the case for their meetings. The better we arm them against any potential objections they might get, the higher conversion we get. I think a very real benefit is that it has elevated the game and the professionalism.
Clark: In addition, I think we became very complacent in being knowledgeable about other cities and what their value propositions are. The last two years have allowed us to raise our confidence level in the value proposition of Las Vegas, and we've certainly gotten much better at selling against those other cities.
Meyer: As an industry we've driven a message through a lot of our industry organizations that has allowed a galvanization process to happen with regard to elevating the awareness as to why meetings are important. You're seeing it in USTA, MPI, ASAE, PCMA, Site, and others. At all the different industry organizations raising public awareness is a top line item now, and it wasn't before 2009. Some organizations have even written it into their strategic plans.
Bello: It's tough to say that there was much good. Customers want year-over-year pricing. It's tough to convince a client that the last two years have been an anomaly. You want to go back to some prime years to justify a higher rate, and they want to go year-over-year so it's tough to get an increase above five percent.
Here's the benefit to me—if there is any benefit. There's a different demographic profile to help you over tough times. I took VA (Veteran Administration) groups in April. In the past I never would have done that because they wouldn't have been able to meet the rate requirements. On the other hand, I got a VA group in August that filled over 20,000 room nights. It's giving exposure to a demographic that we traditionally ignored, but now Vegas has exposure to them.
Babilino: We've had to look at business planning differently. At the end of 2008, when we were planning for '09, the president of our hotel literally said: "Dump everything you've done and start over. It was like taking your junk drawer at home, dumping everything out, and reorganizing the whole thing. We don't do anything the same as we did in '07-'08. It's totally different. And it's made us much better and much stronger. it's truly made us salespeople. I'm not sure we were salespeople before.
Toney: I can remember years ago we'd get back to a client in 24 to 48 hours. Typically, now, clients are talking to a sales manager right when they get on the phone. I think that goes a long way toward servicing the client. Because I think we'll all admit, at one time we were all fat and happy in this room and we'd get around to returning that phone call. But now everybody jumps on that call and we've got customer service as good as anyone in the country right now.
Bello: Maybe the biggest thing is what Chris just said. Now you're talking about offering more value for the dollar. We've always had that over the other cities in the United States, with multiple price points and the sheer volume of hotel rooms close to meeting space. But with the rates, what's happened is the biggest benefactor is the client.
Peru: It's pushed us enough out of our comfort zone. Vegas had a reputation of being a different animal to deal with, but being pushed out of our comfort zone these last two years has made us go back to basics, finding out who we're competing with, recreating the tool box, being more willing to be in a partnership with our clients. Being more the pitchers for business, rather than just the catchers. It's improved our image within the meetings industry. I hear it from other hoteliers across the country. They say: "One of our biggest selling points was the air that you had about you and that's gone now."
SM: Are there any industry segments that have been more resilient than others?
Brunelle: Medical, pharma, and high-tech are leading the way. Financial and insurance are starting to come back. Associations and trade shows are getting strong again. Many of our association clients are exceeding their room blocks, which is a good sign.
Peru: I think the associations are working harder because they understand the value of their blocks and the role managing that properly plays in providing a value to their members. So they've gotten more creative in planning their trade shows and meetings to ensure that there is a value to their membership, and being more on top of their blocks to make sure there is that rate integrity.
Chris Bond: Vegas as a destination has become stronger because associations have frowned on how they were treated in the past, but now you'll see we're partnering with them in ways that they haven't seen before. The last two years have strengthened us and made us better partners.
SM: How is 2011 looking?
Babilino: Room nights are up, but we're still struggling with ADR (Average Daily Room Rate) as we climb out of that abyss.
SM: Some hospitality organizations are predicting that room rates will increase in 2011; are any of you predicting a raise in rates?
Brunelle: I think the point that Eric made earlier is that we are lost in room rates from three, four, or even five years ago. Rates will start to come up, but it will take time to get back to where they should be. It's going take time to rebound to get back to where normal is going to be in relation to the past.
Meyer: And we've added more hotel rooms in the meantime—a lot of hotel rooms.
Harper: And when it does get back to whatever normal is, it's still going to be the best value in town.
Green Meetings and CSR
SM: Is the trend toward green meetings still going strong?
Toney: It comes up an awful lot, but it's typically not a deal-breaker. But it's something that Station's casinos has embraced. We have dozens of initiatives in place right now. We even take planners on back-of-the-house tours to show them what our green initiatives.
Clark: We've learned over the years that the customer is the most important thing. Our customers have been telling us that green is important to them for a number of years. They also tell us that they're not quite sure what it looks like and they need a partner to help them. We're trying to put that together. Our entire team is now green meeting certified. We're planting trees to offset the carbon footprint of our banquet services.
This past weekend we had several hundred planners on property for an event, and we took them to a corporate social responsibility event where we painted 10 homes for housing foster children. Customers are interested in learning how to run and operate these types of activities when they run their own events. And they're looking for partners who can help them do that. I think the only thing they can be sure about is green meetings is a joint venture, and hoteliers and planners have to travel that road together.
Meyer: I'll bet we're doing more as a city that most other destinations around the U.S.
Gay: It's the right thing to do. In the RFP it comes up, and certainly there is an expectation about it.
Clark: I think there's a certain level of discomfort about it too. Because the primary driver is to do it because it's the right thing. But the discomfort comes from embracing the idea that it can also be a profitable thing to do. You do it first because the reasons are right, but then you also do it because everyone can benefit financially from these activities.
SM: Is the corporate social responsibility component as strong as the green trend?
Brunelle: Very much so. On Friday, our chairman came in and did a presentation on a philanthropy program, and over the past few years, MGM Grand employees have contributed in the range of $35 million. That includes Habitat for Humanity, which includes things like this weekend where our employees were building a house right alongside our chairmen.
Brian Keenan: A lot of the conventions we're seeing at the MGM properties are also getting involved in these activities.
SM: Are you seeing more of a demand for technology that will extend the reach of an event beyond the face-to-face?
Harper: Are you talking about telepresence? As a hotelier I struggled with that initially, when it started coming up a few years ago. I couldn't see how it was going to drive a room night. But over time, you see various business cases and presentations from corporate customers that have shown attendance at the facility has not been impacted, but the reach has grown to more employees, more constituents through various technologies. And it has actually encouraged them to be part of that face-to-face event down the road. So in the beginning I was not a fan. Now it seems like there are some benefits coming out of it.
Clark: It's actually turned into a driver to your point. They go there, they get the extended reach, and then they just gotta be there to connect face-to-face.
Harper: And there's a time and a place for it. It's not the end-all for every opportunity. But it certainly has a role to play.
Meyer: There are a lot requests for more bandwidth at lower cost, and this community has responded to that. We've got Wi-Fi, 4G, 2G, 3G, fiber optics, DSL, and wireless everywhere in the valley. In this entire valley there is not a place you can't go where you're not able to ping one of those technologies to do what you need to do. And that has helped our clients bring these new technologies to their events so they can serve a greater constituency than just the face-to-face.
Harper: And it's not coincidental that high-tech is one of our biggest markets. As Chris said, there's an infrastructure built for speed to serve the needs of that segment.
SM: How about incentive programs—are they starting to come back to Las Vegas?
Meyer: Do you mean reward programs (laughs)?
Clark: Yes. I think the world realizes that they need to put reward programs in place so they can continue to grow and drive their businesses forward.
Peru: I think that they look different though. I think they are trying to offer the reward program but also show an ROI as far as being able to get business done. I think the scrutiny on the straight incentive and the ability to get the straight incentive is minimal compared to what it was a few years ago.
Harper: That segment, more than any, has taken advantage of local outreach for CSR-type of events that give back to the community.
SM: Are clients trimming budgets for meetings and incentives?
Brunelle: Trimming—you mean after the room rates have been trimmed (laughs)?
Babilino: And after the discounts have been given on the food and beverage (laughs)?
Toney: What we're finding is the closing night event with the national act or national speaker, which was commonplace a few years ago, is gone. So Huey Lewis and the News playing to a group of 600 folks in a ballroom is not happening the way it used to.
Babilino: I think the length of stay is diminishing. Companies are managing room nights tighter, doubling up where they can. And certainly they are being very careful with the amenities. They don't want anything to appear ostentatious or resonate negatively with the shareholders.
Goldsmith: This ties into the social responsibility trend as well. Where a group used to go out and do a golf tournament, they are now utilizing Habitat for Humanity or a similar organization so they are covering both ends.
Harper: There is another phenomenon occurring as all that is going on. It's called the pop-up. There is a tremendous amount of focus in all disciplines in establishing a budget to get the meeting approved, but when it comes time to execute the program, a very consistent uptick in people either undercutting guarantees, creating the pop-ups, or enhancing or adding to the event because the CEO is on property saying: "Wait a minute, I really want that." That's led to a lot of short-term pickup even as everyone is being cautious in the beginning.
Bond: On another positive note, at our price point, the government market has done well, whereas in the past, the per diem prevented us from taking that kind of group. Now, being creative with where our rate is in relation to the per diem and finding ways to apply the difference toward food and beverage makes it a viable group all around for all of us.
SM: Has the airlines raising fares and fees had any impact on meeting budgets?
Clark: It's proving once again that Las Vegas is a great destination to come to. If you compare airfares with those for any other city in the U.S., we still come out on top.
Harper: It just doesn't come up in conversation. I've never heard anyone say, "I'm not coming to Vegas because I can't get lift." We still have at least 62,000 seats a day, right, Chris?
Meyer: More than that. I think people complain to each other individually about the fees and fares, but it's not something you hear in the business conversation.
Babilino: Plus I think that the offset of the value the city offers plays a role. This city is a draw. A few airline fees aren't going to take away from that.
SM: Let's talk about CityCenter and its impact on meeting groups and the city itself.
Harper: There's been a tremendous amount of media attention both domestic and international, and we've all benefited from that, so I think that's been a big positive. The fact that it was the single largest generator of new jobs in 2009—adding 10,000 jobs to the local economy, I think that was a huge positive. The media ran amok about whether it was going to open—but it did and the numbers are getting better every quarter. Adding extra inventory at a time when the country is going through one of the worst recessions in its history is not an easy conversation to have. But in the end, we strongly believe it's going to generate more interest and drive more visitation because everyone always wants to come here and see what's new. That behavior hasn't changed. My competitors around the room may have a different view, but that's my view.
Clark: I don't think we do. Las Vegas has had a long history of supporting competition. It's good for the city. A lot of what you just said is true. But it's probably still too early to tell. Though it is difficult to open a new property in this environment.
Babilino: I think the most important thing is that we want everyone to be successful. Because if we're not successful the city doesn't succeed.
Bello: It's really a short-term and long-term issue. In the short term it's a new competitor bringing a lot of room inventory into the city, so from that perspective it drags down the room rate. But in the long term, it's got to be a good thing. The building is so damn unique. I don't think anyone has ever spent that kind of money to build something and that makes it another barrier of entry to any other destination trying to compete with us.
High Tides Raise All Boats
SM: What's the main challenge facing Las Vegas?
Peru: The last two years were a perfect storm of events that Las Vegas had to weather, and I think time is what the city needs to fully emerge from that and go through our next reinvention. It's a very resilient city. It's going to come back, it's coming back right now; it's just going to take time.
Gay: The big thing is going to be getting increased air capacity in here to support the growth that is ongoing.
Bello: We continue be a domestic market. We don't have the international visitation that other cities have. We need to make a greater effort in getting international visitors here—especially from Asia. We need to get the mass market; we already get the whales.
Meyer: Our challenges are external in nature—some we have control over, some we don't. Eric mentioned our need to attract international visitors, and that is true. Fortunately we already have infrastructure under development that will get us ten times the international air capacity than we currently have, in the form of Terminal 3. Our airport will look significantly different in 18 months. It will allow a lot easier transportation into and out of our market. I think at the end of the day that will help us to win business from destinations that are currently pass through destinations. We can't control the economy, so when people aren't working, that makes it difficult for them to come here. But our brand is strong both domestically and internationally. People want to come here.
Originally published Nov. 1, 2010