Las Vegas used to suggest playfully that visitors can forget any overindulgence they experienced while in town. Now city officials are urging business executives to remember why they wanted to come in the first place.
In an open letter published in The Wall Street Journal on Feb. 23, Las Vegas fired the first salvo in a new ad campaign that urges business executives to recall the city's nearly 10 million square feet of meeting space, its thousands of hotel rooms, and the 22,000 conventions staged there every year. It's a far cry from the glitz and innuendos that made Sin City America's playground—and a target for politicians everywhere. But will it be enough to revive the city's sagging fortunes?
That's not an academic question. Vegas is suffering more than most U.S. cities, across a broad front. Home prices have been cut in half since their June 2006 peak, according to the Greater Las Vegas Association of Realtors. Unemployment hit 9.1% in December, well above 7.2% nationally. The city's economy is narrowly focused on gaming, leisure, and consumer spending. So as vacationers pull back, Las Vegas is naturally in the crosshairs.
City officials had hoped that business meetings might pick up some of the slack. Those conventions and smaller meetings accounted for 46,000 jobs last year, nearly 15% of the city's employment base, and had an economic impact of $8.5 billion when all spending was accounted for. But now that a trip to Vegas has become synonymous with wasteful spending in the eyes of many investors and taxpayers—and with more and more businesses worrying about their public image as they queue up for public assistance—corporate visits are suffering as well.
"Pick a topic and Vegas is not doing well," says Mike Helmar, director of industry services for Moody's (MCO) Economy.com.
Reinventing Vegas won't be easy. Spurred by advertising, including the popular "What Happens Here, Stays Here" slogan, Vegas cemented its reputation as a place to misbehave—and to reward boom-time performance. Visitors flocked to the city (39 million in 2007 alone, an 11% increase from 2002), rooms filled up (occupancy hit 90% in 2007, up from 84%), and gaming revenue surged (to $10.8 billion from $7.6 billion, a 42% gain). That growth was reflected in the Vegas area's gross metro product, which grew at a 10% clip from 2001 to 2006, according to the most recent data. It was as if the disastrous earlier attempt to position Vegas as a family-friendly hot spot never happened.
"What Happens Here, Stays Here" reached 70% awareness in January 2005, according to an internal memo from R&R Partners, the agency that created the ad. But in hindsight, that branding effort might have been too successful. In this environment, being viewed as America's playground may be dragging the city down.
Financial-services firms in particular have been avoiding Sin City. Goldman Sachs (GS) and Wells Fargo (WFC) moved meetings from Vegas to San Francisco after comments from President Barack Obama grouped trips to the Strip with banker bonuses. "…You are not going to be able to give out these big bonuses until you pay taxpayers back," Obama said at a Feb. 9 town hall meeting in Elkhart, Ind. "You can't take a trip to Las Vegas or go down to the Super Bowl on the taxpayers' dime."
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