Movement afoot among hotel operators to reinvent Las Vegas yet again - Business

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Mar. 04, 2009
Copyright © Las Vegas Review-Journal

CORRECTION, 3/5/09 -- A story on Page 1D of Wednesday’s Business section contained an error. A quote, “We are all in the same boat. If your tips are down, my bonus is gone,” should have been attributed to John Shigley, executive vice president of operations at MGM Grand.

Movement afoot among hotel operators to reinvent Las Vegas yet again

Rapid, unsettling changes topple every facet of city's business model

By BENJAMIN SPILLMAN
LAS VEGAS REVIEW-JOURNAL

From left, Roger Bloss, with the Vantage Hospitality Group, John Shigley, with MGM Grand, and John Unwin, with Caesars Palace, discuss industry trends Tuesday at a conference in Las Vegas.
Photo by John Gurzinski.

It's no secret the growing, global recession is hitting Las Vegas as hard as any city in America.

In less than a year, the city's biggest resort companies lost billions of dollars in value, watched helplessly as millions of business and leisure customers canceled visits or skipped return trips, and eliminated thousands of jobs.

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But even with no end to the bad news in sight, there's a movement afoot to reinvent Las Vegas yet again, a process that's unfolding in private in closed-door conference rooms and in front of customers at restaurants and on casino floors.

"We really have to rethink our business," said John Unwin, senior vice president for hotel operations at Caesars Palace. "We thought we had clarity on the future a year or two ago when we made all these big investments. Obviously, we didn't."

Unwin was one of three executives who spoke Tuesday to about 100 hospitality industry people at International Hospitality Week, concurrent hotel, restaurant and bar conferences at the Las Vegas Convention Center.

He said the changes are so swift and unsettling they've upended virtually every aspect of the Las Vegas business model.

People who manage the world's biggest and poshest resorts are now turning to every corner of their properties for advice on how to cut costs, find new business and maintain morale in buildings that can cost $2 million per day to keep running.

"We have very spirited discussions about it every week," Unwin said.

And the reinvention ideas are coming from unlikely sources.

Unwin said managers at Caesars recently boosted revenue in one section of the casino by 10 percent on the advice of a security guard. According to Unwin, the guard noticed that when performers such as Cher were wrapping up events in the evening, the band playing just outside the main showroom would often be on a break. By changing the casino band's break timing, Caesars was able to increase the likelihood that some of the 4,200 people leaving the featured event would stick around and spend money.

Roger Bloss, founder, president and CEO of Vantage Hospitality in Las Vegas, said the recession has everyone in his company from maids to general managers reconsidering their role in keeping the company afloat.

Bloss, whose company owns the brand America's Best Value Inn, which has more than 800 independent franchise locations around the country, said the newfound energy is natural survival instinct.

"We've turned everyone we have into salespeople," Bloss said. "Some of our people are having to do something they haven't done in 20 to 25 years, that is going out and knocking on doors to try and make sales."

John Shigley, executive vice president of operations at MGM Grand, says the recession has operators reinventing their properties on the fly to meet new expectations that customers are placing on Las Vegas.

"The image of Las Vegas has changed from decadence, extravagance and luxury ... to, now, a value proposition," Shigley said.

He estimated the local hospitality industry has shed 15 percent to 20 percent of its work force and that remaining workers -- including the top brass -- have been jolted into taking action.

"The employees who are still here are very motivated to keep their jobs," Shigley said. "Everybody is getting very creative in how they do their business."

All three on the Tuesday panel said the downturn in convention business has been especially damaging.

Operators have managed to keep rooms full on weekends by cutting rates and they cited Super Bowl weekend, recent NASCAR races in Las Vegas and an upcoming country music awards event in town as particularly strong drivers.

But all three also used unprintable-in-a-family-newspaper expletives to describe the business environment. They also criticized government officials in general and President Barack Obama specifically for cultivating a sentiment that, for businesses seeking aid from the taxpayers, Las Vegas is a wasteful place to hold events.

"There is a guilt factor right now," Bloss said.

Each cited examples of major conferences and meetings for computer technicians, surgeons and hoteliers that save money and boost attendance by having their meetings in Las Vegas.

Unwin said a bank cancellation of 2,800 room nights in January not only resulted in the bank paying cancellation fees, it also cost 230 maids work for the weekend.

"We are all in the same boat," Unwin said. "If your tips are down, my bonus is gone."

Contact Benjamin Spillman at bspillman @reviewjournal.com or 702-477-3861.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. William Johnson wrote on March 10, 2009 10:06 PM: I've been visiting your cities casinos with family and friends since 1993. Our little group has noticed many changes, the worst was trying to appeal to families with children by the Corporate, non-gaming, investors. Now they think that cutting back on Comps, perks, etc. will bring back their bottom line. The "free lunch" was never free we paid for it with our gaming losses. Rather than blame the loss of revenue on politics, governence, or the state of economies, offer your "lost customers" the comps they took for granted in the old days and see how many will give you a second chance. I remember the bartender who never filled a shotglass over the line, instead he bought an occasional drink for his customer and was repaid with friendship and loyalty. How about “priming the pump” I do not believe that the “outsiders” who run a lot of casinos in Las Vegas understand either of these principles. I think that you have to spend a little to make a lot. “Cost Cutting” will never replace increasing your revenue, there are only so many employees that top brass can lay off and these layoffs will never increase revenue. No matter how good you make your books look your bottom line will continue to shrink. Michael Contorelli wrote on March 08, 2009 01:24 PM: I am completely disgusted with this city....we had the golden goose and we slayed it in the name of greed! We had more customers than we knew what to do with, we "all" benefited from this once great city. Times have changed and now!!! You have to be a model, have large breasts and be under 30 to considered a candidate for employment! The trend for expensive "everything" created a culture of arrogance and shallowness which in turn alienated a majority of good, hardworking customers who felt out of the loop. Hopefully we "all" will learn from our transgressions and get back to the basics and value each and every one of them instead of just the "in" crowd who thought that a $400 bottle of vodka in a club was fine! LivinInVegas wrote on March 07, 2009 09:41 AM: I have lived in Vegas 10 years now and Manage a large Walgreens store just off the strip. I can tell you that we feel the impact daily and witness the struggles daily of all those affected by the declining strip revenue.Many of my customers are those who work in the casinos.The ongoing layoffs as well as reductions to hours and benefits has been at best life changing for most if not all who shop my store. It's amazing to see how many now walk rather than ride the bus to save a few dollars. This economy and the way the strip has handled it shows just how little job security there really is in this once booming town. Back on 9/11 was the first great example. My advice would be to get out of Dodge if you can and leave the hotel/strip jobs for those who don't care much about long term security and are only passing through. It would be wise to find alternatives such as sports teams or outdoor themeparks etc..to help fill these hotel rooms we so ridiculously built! And as a local- I could never afford a night on the strip- Never.. conservatist wrote on March 07, 2009 09:16 AM: This all goes to show "us" hard working middle class people..... It's easy to steer the ship in calm water's... Now that the wind's are a'blowin', the 20 million a year exec's are not looking so godlike in their 2000.00 suits.... David wrote on March 06, 2009 09:42 AM: I am a regular Vegas visitor 2-3 times per year for the last 17 years. Vegas used to be about the gambling everything else was an enticement to bring in the gambler. If you want people to gamble more lower the limits and loosen the game. The house edge on video poker, and Blackjack along with the high min bet has kept me off the strip for the last 5 years. The strip resorts felt comfortable making huge profits off velvet rope clubs, gourmet dining and high end shows. Go back to your roots! A fair game, a free drink, and some good food at reasonable price. Mike wrote on March 05, 2009 01:36 AM: You all hit the major points about the problem. Let me emphasize the main one I like quoting the article, " ...in buildings that can cost $2 million per day to keep running." Now the casinos MUST win just to stay afloat. It is no longer gambling in Las Vegas. The definition of GAMBLE–verb (used without object) 1. to play at any game of chance for money or other stakes. The casinos having taken out that word for many visitors and replaced it with another: SCAM. The definition of SCAM–noun 1.a confidence game or other fraudulent scheme, esp. for making a quick profit; swindle. There is NO chance to win for a ridiculously high percentage of people who visit Vegas, or locals who partake in gaming. Another case of a top heavy corporate structure, only this time it is a whole city! JohnInIllinois wrote on March 05, 2009 12:49 AM: All great comments, but nothing to suggest a new theme to "reinvent" Las Vegas, which the article was about...how about "Come to Vegas, were you can WIN and WIN more often" and make that a TRUE STATEMENT. I will never return until I hear that the slots are looser than they were in Aug. 2008--my last visit. We have plenty of nice casinos in my area (St. Louis/Central IL), so why shold I pay enormous airfare and lose all my money? Patrick wrote on March 04, 2009 10:56 PM: I just returned from a few days in Las Vegas and had with me some friends that had never been to Las Vegas, or hadn't visited in several years. We stayed at the Imperial Palace. The beds were hard, breakfast buffet was so so, and some food was already cold (We were the FIRST at the buffet when it opened at 8 a.m. 3-2-09) Yes I agree with Freezing in Ohio on all points. My friends were more interested in sights outside of Vegas than in Vegas. We all found the lack of Egyptian decor in the Luxor disappointing. One person in my group commented that after a while all the casinos look a like. This time I didn't notice so many homeless, but we were approached for money in the food court at Excalibur by some woman placing keys with a note saying she was deaf. A sales woman at a cosmetic counter in Caesars shopping mall insisted on giving me a facial, and would NOT take NO for an answer. I purchased one of her products thinking I could leave, but no she started putting more products on my face. The woman at the counter at Dollar Car Rental was hateful to me when I wouldn't purchase her pre paid gas, and her insurance because I had my own insurance and travel insurance that covers car rentals days out of service for repairs. Guess it was a slow add-on day for her at Dollar. I will say when I returned the car at Dollar the young man in the garage was very polite and professional. Sid wrote on March 04, 2009 08:11 PM: Thank you for the comments folks, definitely worthwhile reading. Vegas Supporter wrote on March 04, 2009 07:15 PM: Gone are the days when casino/hotel operators would work together to promote the destination. Remember how Las Vegas got the NFR to move from OK City many years ago? They all pitched in, put some money in a bag and bought the cowboys to boost a month that was a financial loser. You will never see MGM, Venetian, Harrahs, Boyd, Wynn and Stations work together like that. Read All Comments