Meetings & Conventions: Betting on Meetings - June
Betting on Meetings
With rapid room growth, casinos need groups to fill
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n the history of gaming towns, it has often
been far more difficult for the International Association of Very
Important, Hardworking Professionals to get hotel rooms than for
the Society of People Who Just Like to Have a Good Time. The first
group - imagine this! - actually spends most of its time in
meetings. The second group, however, can be counted on to drop wads
of cash at the tables and rolls of quarters in the slots.
But in the past, there weren't nearly as many destinations where
gamblers could go to part with their money. And in any one town,
there weren't nearly as many casino hotels crying out in neon:
"Stay here! We're newer! We're bigger! We're glitzier! More
In this increasingly competitive environment, casinos have been
turning to creative sources of revenue beyond gaming: family
attractions, high-end shops, quality dining and - yes - even
meetings. For some casinos, groups are high rollers of another
sort. Conventioneers and meeting attendees tend to pay higher room
rates, spend more on food and beverage, use every service of the
hotel and even leave a few dollars behind on the casino floor.
That's not to say the door is wide open. When it comes time to
book a meeting, planners still are pushed to take midweek dates
instead of prime weekend time, and to pay room rates that are
higher than average leisure rates, tempting attendees to go outside
the block. Yet, there's flexibility in some areas, thanks to more
sparkling-new meeting space, larger available room blocks and a
wider range of options in pricing and environments.
Growing, growing, overgrown?
Overall in the United States, the rapid growth in gaming revenue is
slowing down - this year's growth rate will be less than half that
of 1997, predicted a 1998 Bear Stearns report - and Las Vegas will
be affected the most.
Las Vegas' hotel inventory topped 105,000 rooms at the end of
1997, and the metro area is adding more than 20,000 rooms by the
end of 2000. Included in these figures are massive new themed
casinos on the Strip, such as Paris and Mandalay Bay; expansions of
existing properties, such as the Rio Suites, and traditional
resorts going up in the surrounding valley. Another 50 or so
projects are in the proposal stage.
"With all those rooms coming on board, there's a concern about
the leisure market being able to drive the demand, room rates and
revenue that hotels are looking to generate," says David
Peckinpaugh, MGM Grand's vice president of sales and catering.
According to figures from Coopers & Lybrand, new room supply
may outpace visitation for the first time in Las Vegas. "In the
past 18 to 24 months, there has been a significant increase in room
supply without an increase in new attractions," explains Warren
Marr, manager of the firm's hospitality and gaming consulting
practice in Philadelphia. Most recent room additions came from
existing hotels opening new towers, but these don't entice new
visitors. "When you have a new must-see attraction, then you see a
corresponding major bump in visitation," says Marr.Will Atlantic City
Now celebrating 20 years
of gaming, Atlantic City is pushing to reclaim its former status as
one of America's top convention destinations. The centerpiece of
that effort is a new convention center that opened last year with
500,000 square feet of contiguous exhibit space.
Adjacent to the center is a 500-room headquarters hotel -
a non-gaming Sheraton property - to address meeting planners'
concerns about getting sufficient room blocks from the casinos.
Furthermore, since 1993, the state-run Casino Reinvestment
Development Authority has offered low-interest financing to casinos
to build more hotel rooms if they would commit a certain percentage
of those rooms to convention blocks.
Now Atlantic City offers visitors more than 13,000 hotel
rooms, and up to 7,500 of those are committable to group room
blocks, according to Noreen Bodman, vice president of
communications for the Atlantic City Convention & Visitors
In 1997, Atlantic City added about 1,300 casino hotel
rooms, including expansions of the Hilton, Caesars and Harrah's
properties, according to a Coopers & Lybrand report. No new
openings are expected this year or next year, but a lot of projects
- representing more than 11,000 new casino hotel rooms - have been
proposed. The most definite of those is Mirage Resorts' 2,000-room
Le Jardin, which may be accompanied by two other casinos built by
Boyd Gaming and Circus Circus. (The partners were still in
negotiations at press time.) Also likely is an MGM Grand project;
the company has been looking for property in town. Several existing
casinos have considered further expansions, including Harrah's,
which has another 1,500 rooms in mind.
The prospect of Mirage's Le Jardin - which will be the
area's first full-blown Las Vegas-style theme casino - and
competition from new U.S. gaming jurisdictions - also are prompting
casinos to redevelop and reposition themselves. Bally's opened its
first themed casino area, called Wild Wild West. Caesars is more
heavily developing its Roman Empire theme. And Sun International
may revamp its Resorts Casino Hotel with a beach club atmosphere,
similar to its Atlantis resort in the Bahamas.
Gaming industry analysts feel the city needs to add
must-see attractions to keep people in town longer. According to
Coopers & Lybrand, although Atlantic City is the most heavily
visited destination in the United States, the average visitor stay
is only five to six hours - mostly gamblers from New York or New
Jersey who make the roundtrip in a day.
"For Atlantic City to remain vibrant and healthy, we have
to change with the times," says Bodman. "We have to make it an
overall destination; we can't just rest on gaming." As additional
evidence of the seaside resort area's move in this direction,
Bodman points to recent additions such as a Planet Hollywood, a
Hard Rock Cafe, and a Ripley's Believe It or Not! Museum - as well
as to coming attractions such as a restored historic lighthouse, a
marine life education center and the re-outfitting of the old
Convention Hall into a modern special events arena that will not
only continue to host the Miss America pageant and boxing matches,
but also will welcome concerts, minor-league hockey games and other
In the near future, additional rooms will come largely from such
must-see theme casinos as Mirage Resorts' luxury-market Bellagio,
The Venetian, Hilton's Paris and Circus Circus' Mandalay Bay.
Nonetheless, Coopers & Lybrand predicts that in 1999, room
supply will increase 10.6 percent, while visitation increases 6.3
percent. In 2000, supply will rise 5.5 percent, but visitation only
If major new casinos have drawn visitors in the past, why
wouldn't demand keep up in the future? One reason is travelers have
more choices. At one time, the legalization of gaming elsewhere in
the country was expected to benefit Las Vegas, explains Michael
Gasta, Hilton Gaming Corp.'s vice president of sales and marketing,
who has worked in Las Vegas for 16 years. With gambling in their
own backyards, more people (and corporate business) might perceive
it as acceptable, try it and become interested enough to head to
the big city for the real thing.
But now, says Gasta, "Out-of-state gaming is getting bigger and
bigger. It's not just bingo parlors anymore. They have guest rooms
and meeting space and they're creating more of an entertainment
environment. That has somewhat hurt Las Vegas."
Airline service is another issue. Although McCarran
International Airport is adding 26 gates this summer, "So far the
major carriers have not signed up for significant assignments to
those gates," says Marr. "Southwest and a couple of regional
carriers have taken on new gates, but some carriers from the East
Coast have actually decreased their air service." He adds,
"Passenger traffic was down in December, January and February."
The need for more transcontinental flights becomes even more
important with top-end properties entering Las Vegas for the first
time. "The person that Steve Wynn [Mirage Resorts' owner] is
targeting for Bellagio is not going to want to change planes in
Cleveland to get to Vegas," says Marr. "You need to get direct,
nonstop service with more frequency from major East Coast
Group business pays
With all of these issues facing Las Vegas, "Almost all of the
first-, second- and even some third-tier properties are getting
into the meetings business," says Gasta. "A lot of people who
haven't been players are giving a room block to those events held
at the Sands [Expo Center] or the convention center. They are doing
it for two reasons: They can get a good rate compared to leisure
travelers, and it gives them a base of occupancy to build on."
With the exception of a few properties - such as the Las Vegas
Hilton, next to the convention center, and The Venetian (a new
property being built on the site of the Sands Hotel as part of a
complex that includes the Sands Expo Center) - casino operators
have considered meetings only as midweek filler when business is
low. "Now everyone is realizing there are dollars in the market,"
"It's a very profitable segment, from room rates to banquet
revenue to the length of stay to the profile of the guests," says
Danielle Babilino, vice president of sales for Paris Casino Resort
and Bally's Las Vegas. "The leisure traveler...shops for the best
value. The planner is willing to pay what it takes to produce the
convention. The conventioneer on an expense account has a larger
budget; most will gamble and use room service and the concierge and
all the amenities in the hotel."
Gambling still drives the properties, but "if the market starts
to tighten, the casino hotels are going to look at business in a
different light," says Marr. "They can look at the gaming profile
[how much attendees are likely to spend in the casino] of a group
and offer lower room rates, or they can just lower their
expectation on the gaming profile and take more traditional groups.
As higher-end products enter the market, you'll see a higher
percentage of their revenue coming from non-gaming sources."
As evidence of their new dedication to conventions, casinos
point to recent expansions in meeting space. Among the projects:
Caesars Palace added 110,000 square feet of function space last
year, the MGM Grand Hotel/Casino completed the 380,000-square-foot
MGM Grand Conference Center in April and the Rio Suite Hotel &
Casino will open a 100,000-square-foot convention center by early
New properties are being designed with large amounts of meeting
space. Bellagio will open with 125,000 square feet, Mandalay Bay
with 100,000 square feet, Paris Casino Resort with 130,000 square
feet, and The Venetian will be connected to the Sands Expo Center,
which is expanding to 1.6 million square feet of space.
"Our whole strategy is completely different from other hotels in
Las Vegas that are casino-based operations," says Jeff Beckelman,
vice president of sales and marketing for The Venetian. "We are
building a complex targeted to the convention and trade show
industry." As opposed to the former Sands Hotel, a casino-based
operation with limited meeting space, the primary business at the
Venetian will be large trade shows at the Expo Center, plus smaller
trade shows and conventions.
"We just made a $90 million investment in conventions," says MGM
Grand's Peckinpaugh. "That's probably the biggest message we can
send to the industry." With its new conference space and the
upcoming addition of 2,000 hotel rooms, the MGM Grand wants to host
more events entirely in-house. "We are trying to self-contain as
much business as we can."
Much of the new meeting space is being designed to address
planners' concerns about losing attendees when they pass by the
casino on the way from their guest rooms to the conference rooms.
(See "Being There" on page 75.) For example, the Aladdin Hotel
& Casino, which is being rebuilt, has been designed so that the
casino and convention area will be on separate floors. Similarly,
the MGM Grand Conference Center is a separate building from the
casino, with its own entrance, valet parking and bus area.
Along with the extra meeting space, casinos are beefing up their
convention services. The MGM Grand has added sales and service
staff. According to Peckinpaugh, everyone in convention sales and
service will take the Certified Meeting Professional (CMP) exam.
Plus, at the beginning of this year, the property launched its
first small meetings program - Grand Meetings - to target events of
150 rooms or fewer on peak night.
With the opening of Bellagio, which will target corporate and
incentive customers who typically hold events at Four Seasons or
Ritz-Carlton resorts, "our company [Mirage] is making a commitment
from a service level," says Chris Flatt, vice president of hotel
sales and marketing. "We will have 8,000 employees for 3,000 rooms;
the service ratio to the guest is going to be very, very high."
Planners also may see a difference in service as traditional
hotel companies enter the Las Vegas casino market. (Four Seasons is
partnering with Circus Circus, Marriott is working with MGM Grand,
and Regent is developing a resort.) "The major hotel brands are
used to dealing with meeting planners on a regular basis - that's
their bread and butter," says Marr.
MGM Grand is capitalizing on its new relationship with Marriott,
and not only by getting access to the chain's customer database,
national sales staff and reservations system. Says Peckinpaugh, "We
have sent our convention services staff to spend time in Marriott's
large convention hotels in Anaheim, San Francisco and Orlando
to...see how we can utilize their systems and approach and combine
it with our unique property."
Price and policies
One of the benefits of all the building in Las Vegas, according to
the casinos, is that they now will be able to offer planners more
options. With the opening of Bellagio, Mirage Resorts will have
four Las Vegas properties at different price points. Likewise, when
Paris is finished, Hilton and Bally's will have four properties,
totaling about 12,000 rooms - 10 percent of the city's
"We hope to be able to do in-house conventions within three or
four properties - even to the point of having one contract," says
Hilton's Gasta. "The four properties all offer a very different
environments and different pricing." To start, Paris and the
adjacent Bally's will be sold as one property, with 30 percent of
their total rooms dedicated to the convention market. one sales
department and one convention services team will serve both
Also, with more rooms within a company's portfolio to meet
weekend leisure demand, "I think you are seeing more flexibility
from properties as to the [group booking] patterns that are
acceptable," says Peckinpaugh. "And you're seeing the ceiling on
the number of rooms that hotels will commit to conventions
MGM, Bally's/Paris and Bellagio salespeople said they'd be
willing to book groups on weekends - depending on the dates and
whether any special events, such as concerts or boxing matches, are
scheduled. Paris and Bally's could allot as many as 1,000 to 1,500
rooms for a weekend convention block. "We need to get the midweek
block in first," qualifies Babilino. "But we recognize that, with
5,800 rooms between two complexes, weekend business is a
necessity."Meet me in
Among the newer gaming
markets, Mississippi stands out as the hot growth prospect. Already
known regionally as a vacation beach resort, the Mississippi Gulf
Coast now offers 12 casinos - nine with hotels - in the towns of
Biloxi and Gulfport.
The area's guest room and meeting space inventories
continue to grow. The two Grand Casinos will each have about 1,000
rooms by year-end. The newest property to open, Imperial Palace,
will have 1,088 guest rooms. The Mississippi Coast Coliseum and
Convention Center expanded by 80,000 square feet last fall. And
Mirage will enter the market with its 1,780-room Beau Rivage next
"There is a major shift going on there," says Warren
Marr, a gaming analyst at Coopers & Lybrand. "Beau Rivage will
be setting new standards from a theming standpoint and quality
level. This is certainly a market that will continue to increase
its attraction to group business."
The Mississippi Gulf Coast Convention & Visitors
Bureau claims it doesn't face as much of a challenge as other city
bureaus do in getting meeting room blocks from casinos. "I've
worked in Las Vegas and Atlantic City, and this is about the most
cooperative place," comments Stephen Richer, the CVB's executive
"We have some pretty sophisticated people here, and they
understand the value of that business from Sunday to Friday
morning," adds Richer. (Beau Rivage, for one, expects meetings to
be one-third of its business.) And with a total inventory of about
12,000 rooms - 7,000 in non-casino hotels - the Gulf Coast is able
to house conventions on weekends.
Mississippi's success with casino gaming has even
prompted the tiny town of Tunica to enter the meetings market. Only
a half-hour drive from Tennessee's Memphis International Airport,
Tunica has nine casinos, including brands like Bally's and
Harrah's, all with function space. "They are now competing with
Memphis for meetings business pretty significantly," says Marr of
Coopers & Lybrand.
Three years ago, Tunica had only a handful of hotel
rooms. Now, it has 6,000 rooms and about 140,000 square feet of
meeting space. This year's debut of Circus Circus' Gold Strike
brought 1,200 rooms onto the market, and the Grand Casino is adding
600 more rooms this year. Developer interest is high enough that
the town could soon have as many 10,000 rooms.
While the fledgling destination initially focused on
leisure travelers, it's already going after meetings, in particular
association groups of up to 1,000 for Sunday through Thursday.
"This is really our first year," says Bill Canter, director of
sales and marketing for the Tunica Convention & Visitors
Bureau, formed a year-and-a-half ago. The area's first meetings
guide was released this spring.
Tunica has just begun adding the recreation necessary to
draw more groups: Two of its three theaters opened early this year,
its first golf course opened in May and its second is opening in
October. Plus, it has Memphis nearby.
The town's efforts are paying off. It is now being
included on many Mississippi associations' destination rotations,
and is drawing groups from Tennessee and Arkansas, as well as some
national business. For now, there's no rush to step up the pace of
growth. Says Canter, "We are learning to crawl before we
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