Meeting planners looking for good deals at Las Vegas hotels this year and next could be in for some sticker shock. Although occupancy rates for the first six months of 2005 rose by only 1.2 percent over the same period in 2004, average daily room rates surged 13.4 percent, according to the Las Vegas Convention and Visitors Authority.
The LVCVA figures also showed that meeting business grew the most in that period. While leisure travel declined slightly, room nights occupied by conventioneers increased by 11.6 percent.
Las Vegas hotel occupancies never fell off all that much, even after 9/11, because the hotels were able to fill their rooms with groups," said hotel analyst Chris Stein, vice president of Hospitality Real Estate Counselors in Englewood, Colo. "But now that occupancies are up just a little, room rates have been going up in much higher proportion."
Overall, Las Vegas enjoyed an average occupancy rate of 90.5 percent from January to June this year. While rising room rates in most cities usually follow larger occupancy increases, Las Vegas is a different animal, Stein noted one big difference: Demand is now so strong from both transient and group business that hotels no longer need to offer discounted rates to attract guests. He also believes the opening of Wynn Las Vegas, which commanded room rates averaging over $300 during its first month of operation, is enabling other hotels to get more aggressive.
Whatever the reason for rising rates, meeting planners are already feeling the pinch. "Room rates are going up dramatically," said Alex Doyle, vice president of national accounts for 21st Century Group, a site-selection firm. "In 2004 you could find rates at such properties as Bally's and Paris for $129 or $139, but now the rate is more likely to be $189.
Doyle believes room rates are rising in Las Vegas partly because more high-end groups want to meet there. "We're seeing growth in the number of upscale meetings, groups that want to get into Wynn, Mandalay Bay and other new and upgraded hotels," he said. Richard Harper, vice president of hotel sales and marketing at Mandalay Bay, acknowledged that room-rate increases over the past two years have been in the double digits. "This year's demand for meetings was up, and 2006 will be better yet; we can tell by our booking pace," he said.
Christopher Giblins, regional director–Florida for the site selection firm Helms-Briscoe, also reported that rates are up, but added that Las Vegas is still a good value compared with most other popular meeting destinations. A bigger concern for him is tightening availability. "It's definitely more challenging to get the space, dates and rates you want," he said. "Groups need to book further out. The booking window has gone from six months to a year."
Gail Fitzgerald, vice president of hotel sales and marketing for Bellagio, observed that more planners are taking advantage of the off-season in order get the dates and rates they need. "We had such a strong summer this year that some people have remarked there doesn't seem to be a slow season anymore," she said.