Vegas offers a lesson for Atlantic City: Midweek conventions can pay off

LAS VEGAS - Global Gaming Expo (G2E), the annual showcase of all things casinos - 40 companies, 520 exhibitors, 130 conference sessions - drew more than 26,000 people here last week and reaped $15.7 million for the local economy via hotel bookings, restaurant tabs, and show tickets.

It was a big midweek event even for Vegas, where gatherings of 500 people or fewer are more common. And the kind of splashy gathering Atlantic City can only dream about.

Small conventions, trade shows, and meetings of 250 to 1,000 people - those are what Gov. Christie craves right now as part of his proposed overhaul of the Shore resort. Boosting convention business in Atlantic City by 30 percent over the next five years and maximizing use of the city's 17,000 hotel rooms by lowering group rates are high on his list.

"It's absolutely needed," said Cory H. Morowitz of Morowitz Gaming Advisors L.L.C. in Galloway Township, N.J. "It's opening a market that's not currently being served well by Atlantic City, at a time of the week when the lights are off."

To pry open that market, several gaming- and leisure-industry observers said, Atlantic City needs to think smaller, and cheaper, by:

Focusing on regional conventions more likely to seek out a drive-to destination.

Improving sales and marketing channels to attract small meetings and gatherings, as well as tourists.

Building more hotel rooms, priced more affordably.

Comping far fewer guests, offering high-quality hotel rooms to customers paying to stay in them.

Last week, the New Jersey Legislature began considering parts of the Republican governor's plan, as well as the Democrats' take on how to best turn Atlantic City around.

On Monday, a Senate committee released bills that would create a state-run tourism district while streamlining casino regulations. Lawmakers hope to reconcile the Legislature's and Christie's proposals and have a strategy in place by 2011.

For Atlantic City, the stakes are huge. Gambling revenue, which for three-plus decades forged its financial backbone and identity, continues to plummet. Figures released Nov. 10 by the Casino Control Commission showed revenue down 9.1 percent for the first 10 months of 2010 compared with the same period in 2009.

A look at how the world's biggest convention town gets it done spotlights the many challenges ahead for Atlantic City, which lacks Las Vegas' wealth of hotel rooms and casinos and its optimal infrastructure - a bigger airport, industry analysts say, and better highways.

About 15 percent of visitors to Las Vegas go for conventions, meetings, and trade shows. The city has 148,000-plus rooms, with nearly 3,000 more due in December with the opening of the Strip's 34th casino, the $3.9 billion Cosmopolitan.

Obviously, that abundance sets Vegas apart from other cities, said Jack Ferguson, head of the Philadelphia Convention and Visitors Bureau, which books the Pennsylvania Convention Center.

A premier Vegas casino hotel by itself can accommodate a convention requiring 3,500 rooms, he said. In Philadelphia, a gathering that size would mean booking hotel rooms across Center City.

"We lose business to Vegas," Ferguson said. "There is no question that we do."

The sheer volume of rooms also allows Las Vegas to host several large conventions at once, he said.

Last week, for example, there were four, including Empower 180, a one-day convention Wednesday for women in business that attracted 15,000 to the Venetian Resort Hotel. Wednesday through Saturday, Traders Expo 2010 was at the Mandalay Bay Convention Center.

"The meeting and convention segment is a key component of our business strategy, and one of the areas we have targeted for growth in the coming years," said Rossi Ralenkotter, president and chief executive of the Las Vegas Convention and Visitors Authority.

Of the 20,000 meetings and conventions here annually, 75 percent to 80 percent are groups of 500 people or fewer. Business travelers fill hotels midweek - rooms went for just $59 a night at Bally's Monday through Thursday, and were priced at $139 at the high-end Bellagio - and spend more per trip than leisure visitors do, Ralenkotter said.

Yes, the recession hurt Las Vegas. Convention business slowed, and leisure travel imploded.

"It's still slow, but we're getting them back, little by little," cabbie Yuji Nonaka said as he drove on Swenson Street, where billboards hawked the top acts in town (Barry Manilow, Cirque du Soleil). "Last year was the worst."

Visitor volume was up 2 percent in September from a year earlier, and gaming revenue on the Strip was up 2.8 percent.

"Our resorts have invested billions of dollars to develop the greatest facilities, amenities, and service available," convention authority spokesman Vince Alberta said. "Combine that with the best value for the experience, and you understand why Las Vegas has been the leading convention destination in North America for nearly two decades."

Atlantic City, on the other hand, is taking its first steps toward attracting more conventions and creating non-gaming attractions.

"I think what [Christie] means is that Atlantic City has to move away from the model of pricing rooms low or giving them away for free toward increasing occupancy and room rate," said Morowitz, who spoke on the recession's impact at a G2E panel Tuesday. "This would require some upgrades to rooms and also more room inventory."

Atlantic City is moving in that direction, albeit slowly. Non-gaming net revenue (minus freebies) from the hotel and food-and-beverage sectors was up 9.8 percent in the first nine months of this year, led by a 20.8 percent jump in cash generated from hotel rooms, the Casino Control Commission said Wednesday.

But Atlantic City needs to promote itself on multiple "sales channels" - conventions, events, meetings, tours, and travel - to fill hotel rooms, said Harvey Perkins of Spectrum Gaming Group L.L.C. in Linwood, N.J.

Lacking those, he said, "building new room towers . . . is not the solution."

Mimi Hirschhorn, 62, who works for a urology group at Hahnemann University Hospital, last visited Atlantic City in June with high school and college friends gathering for their third annual reunion.

They stayed at an Econo Lodge on Pacific Avenue, she said, because they couldn't afford the casinos' hotel rates, which started at $300 a night on a Friday during peak season - twice what they paid.

This weekend, you'd pay $199 Friday at Harrah's Resort, but shell out $400 Saturday. (Two shows, Bill Maher at Caesars and Patti LaBelle at Harrah's Resort, were expected to boost demand.) A room at the posh Borgata was $309 Friday, $359 Saturday.

"It's terribly out of whack," Hirschhorn said. "A whale [a high roller] is going to come no matter what, because they comp them. But . . . why quadruple the rates on weekends and have cheap rates midweek? You can go to any hotel Sunday to Thursday as cheap as $49 at Tropicana."

Regional conventions could help Atlantic City become less dependent on comps and fill hotel beds midweek.

Currently, only individual casino hotels track midweek occupancy, representatives of the Casino Control Commission and the city's Convention and Visitors Authority said. At Vegas hotels, September's midweek occupancy rate was 79 percent, down less than a percentage point from September 2009.

As the Las Vegas Convention Center was hosting G2E, the Atlantic City Convention Center welcomed the New Jersey State League of Municipalities. The Tuesday-to-Thursday convention generated 12,045 room nights and $13.7 million in delegate spending, the Convention and Visitors Authority said.

Expanding room inventory through smaller hotels - 200 rooms rather than the 500-room minimum now required - could help Atlantic City, too. Legislation to allow such hotels is set for a vote in the Assembly on Monday; the Senate approved it Sept. 30.

Also part of Christie's vision for the future is folding the Convention and Visitors Authority into a state-run Atlantic City Tourism District.

The governor's conventions goal is reasonable, said the authority's executive president, Jeffrey Vasser.

"As Atlantic City's business has changed, we've moved from a consumer-show model," which brings fewer hotel-room nights, he said, "to a trade-show model."

In 2005, 47,693 room nights were booked by events at the Atlantic City Convention Center, which is on track to break 115,000 room nights by year's end, Vasser said. He expects 5 percent growth next year.

"When we sell Atlantic City as a convention city, we sell . . . the beach and Boardwalk, first-class hotels, attractions, golf, dining, nightlife, shopping, etc.," Vasser said, "and show that not many cities offer all of that, as well as a top-tier convention center and convenient location."

Still, convention planners factor elements such as weather into their decisions, which could help Atlantic City in summer but not so much in fall and winter, when it competes against places such as Phoenix.

John Kempf, an analyst at RBC Capital Markets in New York, said that while Atlantic City had neither the facilities nor the infrastructure to attract trade shows that pull in 10,000-plus people, "it could be more than competitive in the niche corporate-group market, given its proximity to so many businesses."

Businesses such as Marine Equipment & Supply Co. (Mesco) of Thorofare, N.J., which held its two-day trade show in Atlantic City this month for the sixth year in a row after considering Wilmington, Valley Forge, and Baltimore.

Mesco president Donald Kirkland Jr. said the trade show took place midweek for budget reasons. "It's when the hotel rooms are cheaper," he said as he walked amid exhibits of marine and boating supplies in the Atlantic City Convention Center's Hall A.

About a third of the 1,200 participants stayed at least one night at the Sheraton Atlantic City Convention Center Hotel or the Tropicana because of price and convenience, Kirkland said.

Since the Shore is "centrally located to our core markets," Virginia to Connecticut, Mesco will return next year, he said. He's already picked out the dates.