We’re striving to improve on what we’ve created in Las Vegas

By Jim Murren

Thursday, Feb. 4, 2016 | 2 a.m.

Editor’s note: The following is the keynote address presented at the Las Vegas Metro Chamber of Commerce’s annual forecasting event, “Preview Las Vegas,” on Jan. 29.

My theme today is a celebration of Las Vegas as a symbol of dynamic evolution, and a call to action to all of us — this generation — to continue this great heritage of forward momentum.

As much as, or more, than any of the great cities of the world, Las Vegas embraces, Las Vegas embodies and Las Vegas demands change.

It is part of our DNA. It’s pulsating, creative energy; it’s excitement; and it’s the perpetual quest to innovate and to reinvent to make it one of the most dynamic venues on the planet.

It is a mecca of opportunity for creativity, innovation and reinvention in that uniquely American way.

That is why I made it my home, and why I continue to live here.

That is why MGM Resorts has made it our hub.

Our path as a company is deeply intertwined with the sustainability of Nevada and Las Vegas, and that is why we are committed to pushing the evolution of Las Vegas as a great city of industry, a city of culture and a city for all humanity.

Since the city’s founding in 1905, Las Vegas has transformed from a small town hosting a handful of railroad and Hoover Dam construction workers to the forefront of national and international hospitality, entertainment and travel.

Our city has always excelled at identifying the Next Big Thing, anticipating what is next and changing our product to anticipate the needs of our customers.

Some have argued that Las Vegas is about getting something for nothing.

I would argue our customers come here knowing we will exceed their expectations, engage and entertain them with an experience they will not soon forget, and inspire them to come back again and again.

We still have plenty of value to offer people, but we long ago came to recognize that if this market was to thrive in the hotly competitive tourism and entertainment industries, we would have to offer something far more than just low prices.

Innovation and quality had to become part of the Las Vegas experience. And, it has. In addition to our 4 and 5 diamond hotels (more hotel rooms than any other city in the country), we now have some of the nation’s best restaurants, best shows and best shopping.

The change we have seen in the last few years illustrates the resiliency of our Las Vegas.

Six years ago when I talked to you on this stage we were struggling to recover from the Great Recession. This was a brutal time. It was a time that none of us can nor will ever want to see again.

Convention and conference bookings were down profoundly. While there was a glimmer of recovery, the outlook was still very bleak. Particularly hard hit were resorts that catered to the value-centered market.

CityCenter had been open for only one month, and we were moving from construction to operations.

In just six years, a lot has changed — and for the good.

Visitation has achieved an all-time high and continues to climb thanks in part to the efforts of the LVCVA, the efforts of companies like MGM and our colleagues in the resort industry, and everyone in this room who has rallied together to help reposition the Las Vegas of the future.

This demonstrates that we must remain flexible and adaptable to survive and thrive in an ever-changing environment.

I can’t think of another city in America whose citizenry is as open to constant change and evolution as Las Vegas.

It is part of what I love about living here. If every other city’s residents were as willing to consider the new and different, our nation’s economy would look vastly different.

The ability to change, to adapt, to stay relevant – to be resilient – is the heart of my message today.

It is imperative not only to staying competitive, but to our leading the business and leisure travel and tourism sector.

So I want to talk today about the way forward to sustain Las Vegas’s growth and progress.

Education and funding

Let me start by acknowledging the paramount importance of strong public partners working in consort with a visionary private sector in the evolution of a great city.

No city can achieve its full potential alone, without the support of rational, equitable public policy and strong public institutions at both the state and local levels.

This requires visionary, intelligent and pragmatic leadership from our elected and appointed officials. Las Vegas and Nevada are no exception.

Six years ago I spoke of the need for leadership from our elected officials, so that we could properly fund our state budget. I called upon legislators and the broader business community to support a plan to move Nevada forward.

Even six years ago, it wasn’t a new call to action; our company, our industry, and many others had long advocated for a broad-based business tax for education and other critical state needs.

We weren’t immediately successful. But strong political leadership and businesses pulling together ultimately prevailed. And last year, Governor Sandoval and our legislature advanced legislation to provide a broad-based business tax to better fund our state’s budget.

The governor and our legislative leaders moved this legislation despite significant pressure from those who were satisfied with the status quo and didn’t want to pay any more for Nevada’s schools and other critical needs.

We are grateful not only to our state leaders, but to the broader business community, including the Las Vegas Metro Chamber, who supported the final legislation and secured its passage.

The new revenue wasn’t intended to be a hand-out for education. Rather, the revenue was designed to foster systemic improvements, drive accountability through program evaluations, uplift underperforming schools, and promote pay for performance along with other teacher incentives.

It’s not enough to have increased funding for education, however; we also need to assure that those dollars are spent well and wisely. Parents, teachers, the business community, and most of all our students deserve that assurance.

We fought hard for increased funding; we will fight equally hard for increased results. Unfortunately, those same naysayers who tried to stop greater funding for public education are still trying to stop it.

A strong public education system is the essential foundation of a thriving community: it not only prepares and benefits current residents, but it is also a magnet to attract new business and top talent to our State and our communities.

MGM Resorts will do its part, and I challenge all sectors of our community – citizens, business, government, academia – to unite with us to improve and preserve effective public education here in Las Vegas and Nevada.

We must engage in the civic process of electing leaders who see the vision of the future of growth and opportunity.

It is vital to our quality of our life, the quality of our community and the quality of our future.

Financial/state of hospitality and entertainment — core industry

Let’s turn in more detail to the economic status of Las Vegas and our core industry today.

The global financial markets have had a rough start to the year with the markets down caused by worries of slowing growth.

On the other hand, there are some positive signs that the economy is growing.

Our unemployment rate is at its lowest level since 2008 at 5%; and auto and home sales remain solid. In fact, U.S. auto sales were an all-time record last year. Now that’s a change from when I was last on this stage.

In Las Vegas, I am highly encouraged about the trends that we are seeing.

As you’ve heard several times city-wide visitation last year beat 2014’s record levels at more than 42 million visitors.

Occupancy levels are near 2007 rates (90.4% in 2007 vs 88.6% YTD Nov). However, convention attendance continues to be far below the numbers we saw in 2007.

This shortfall has hurt Las Vegas and has been particularly felt at resorts that cater to middle economy segments. Profits are down profoundly at those resorts resulting in loss of thousands of jobs.

This needs to be addressed with bold action. The good news is that economic forces are our friend, and we have a plan.

We are seeing positive passenger traffic trends at McCarran this year (+6% YTD Nov 2015). At MGM, our convention business, which played a vital role in the city’s growth over the past few years, was extremely strong last year, and we don’t see any signs of it slowing this year.

In 2014, MGM Resorts ended the year with an all-time record in total room nights dedicated to the convention customer. Last year, we beat that record, which I believe is a huge accomplishment.

The corporate customer has come back in a meaningful way, and they now make up more than 60% of our future bookings – this is a true sign that American business is in better shape. We are seeing strength across several different sectors such as Tech, Financial, Pharma and Insurance.

MGM’s convention business is continuing to grow.

In order to keep pace with this demand, we expanded the Mandalay Bay Convention Center by 350,000 square feet, which fully came online just last week, and Aria also announced a 200,000 square-foot expansion of its convention space which will open in February 2018.

This city is recovering, and MGM Resorts is investing to make this happen the best way we know how – Entertainment.

In fact, we, along with our partners the last several years are investing more than $1 billion along the Strip.

The Las Vegas Strip has undergone tremendous diversification over the past two decades, and gaming now makes up just 30% of MGM’s total Las Vegas Strip revenues.

Our unique combination of hospitality, conventions, gaming, entertainment, and world-class events make Las Vegas an ideal, multi-dimensional destination.

Few cities can support a single world class event, never mind several events occurring at the same time. None of what we do would be possible without the leadership and engagement at the county level, starting at the top with the Commissioners. Thank you very much for all you do.

Infrastructure

None of what we do, and will do, is possible without infrastructure — water, energy, roads, mass transit, air.

This is where the public sector and the private sector meet to get things done — together for the common good.

Thanks to the vision of Governor Sandoval, and Steve Hill, we have an Infrastructure Commission that is thoughtfully taking inventory of our current assets against projections for the future.

Convention Center

I want to pause here on the subject of conventions and our Las Vegas Convention Center.

Las Vegas’ hard-earned dominance as the premier convention and entertainment destination should not be taken for granted. It is under threat. Massive Capital investments have catapulted our largest competitors---Los Angeles, San Francisco, Chicago, Washington, DC, Orlando, New York City, Boston.

Our competitors are working very hard to take business away from us, and we must rise to the challenge and forcefully face that threat.

The Las Vegas Convention Center is more than 50 years old and in need of extensive renovation and expansion to remain viable and competitive.

The last expansion occurred almost 15 years ago. Last year, the LVCVA announced plans to expand the Las Vegas Convention Center. This will give Las Vegas another boost in its competition for convention business with Los Angeles, San Diego, Chicago, Orlando, Austin and other cities – not only domestically, but internationally.

The proposed expansion would position Las Vegas to maintain its leadership in the convention and exhibition industry by adding another desperately needed 2.3 million square feet.

To hinder or delay this process would have significant negative consequences.

We can’t afford to be left behind.

The well-being of our entire community is dependent on our continued offering of competitive modern tradeshow and meeting facilities.

It’s significant to note that MGM has more convention space than any of our industry colleagues. We are not afraid to compete with a renovated and expanded convention center. Everyone gains when our economy grows, and we understand this expansion will be healthy for the whole of Las Vegas and the region.

This must be done to further secure Las Vegas’s position as the pre-eminent destination for leisure, and for business.

Key developments in community infrastructure

Transportation

I also welcome RTC’s efforts to improve public transport. Infrastructure enhancements such as High Capacity Transit, linking mass transit to the airport, upgrading surface streets and roads, making pedestrian traffic safer, and improving our freeways are necessary for our growing visitation rates.

A significant portion of our visitors make the drive up the I-15 from California. Providing multiple efficient modes of travel between our states is a great way to ensure that our visitor numbers from California, Arizona and beyond can continue to grow. This is expensive, so will need to be assessed with other community needs.

Health care

Another immense step forward is the development of the new School of Medicine at UNLV. Combined with Roseman and Touro Universities, we will grow the number of doctors and clinicians trained here, and---even better---who will stay here.

No longer will we have to compete to import clinicians into our community to keep pace with our population growth.

In addition to helping us to improve access to timely and effective care, we will also have new advances to medicine here---via clinical research and clinical trials – and to boot, more business and job opportunities to support a growing health care sector.

We see the success right now in the area of important brain research and care being conducted and provided every day by the Cleveland Clinic at the Lou Ruvo Center.

Hospitality education

Likewise, we are buttressing Las Vegas’ position as the center of excellence in hospitality education and training.

Quality hospitality is more important than ever in a society where people share feedback instantaneously through social media. World-class – not good – customer service is the lifeblood of our success, not just as a company but as a city and a destination.

This requires a workforce that is second to none. We are committed to making sure that the UNLV/Harrah School of Hospitality & Management remains second to none.

Transforming the Strip: The park and T-Mobile Arena

Along with these substantial improvements in our community infrastructure, we are on the verge of a fantastic new development in the universal pastime of all Las Vegas visitors – that is, walking the Strip.

The world’s finest cities have beautiful public spaces that connect grand buildings and create a vibrant, urban environment where people can explore, engage and connect with one another.

Today’s consumer wants to determine their own destiny and gather experiences as they travel– it’s no longer about visiting one resort and staying there for the duration of their Las Vegas visit.

With this in mind, we’ve created an environment that invites our guests to explore the West side of The Strip, collecting experiences along the way. Last year we opened the Boulevard Plaza in front of New York-New York. In April MGM Resorts will debut The Park as an outdoor gathering place for people to relax, dine and be entertained.

When it opens with the T-Mobile Arena, The Park will offer an immersive outdoor destination between New York-New York and Monte Carlo with events and programming for both tourists and the Las Vegas community. We look forward to seeing you there!

I feel very strongly that we’re introducing something totally new to the Las Vegas experience, both for tourists and for our own local community.

Future

But allow me to ask a question that has been nagging me for quite some time…one that resurfaces especially every time I consider how far we have come as a community—since our inception and equally since the recession.

If we have evolved so much as a city, from an outpost in the desert to a leader in entertainment, hospitality and social responsibility, then why are we defining ourselves—or worse yet allowing others to define us—based on who we once were – instead of who we now are?

Recently, I decided to stop referring to Las Vegas as “Sin City” whenever possible. There was a time when it was an apt description; people came to Las Vegas to do what they felt they couldn’t do in Quaint Town, USA. It worked as a marketing tool, too. But those days are gone.

Conclusion

In conclusion:

There is no doubt that Las Vegas is a resilient city; in the last six years we have survived the biggest haymakers the global economy could ever throw at us. And we have turned challenge into opportunity, and we are now witnessing another shift in the Las Vegas paradigm, on many different fronts.

We are the entertainment capital of the world.

Our success as the global entertainment leader is rooted in our DNA as innovators and creators that see great things and then come together to bring it to reality.

We are an enlightened and generous city; relentless in our efforts to defeat local community challenges, including hunger and homelessness.

And we are a sustainable city; leveraging new technologies to ensure the exquisite experiences we provide our guests are offered in an environmentally responsible way.

And this is an area I want to emphasize.

Las Vegas is in fact a sustainable destination. The drought has underscored even more the need to be prudent stewards of the scarce resources to which we are entrusted for future generations. We need to tell our story of sustainability.

But I want to leave us all with a challenge. As much as we have progressed, there are still miles ahead in our collective journey to making Las Vegas an even greater city and destination than it is right here and right now.

I will repeat what I said a few minutes ago: we cannot take past success for granted and sit on the laurels of the past. We must constantly strive to make our next years our best years.

For our part, MGM Resorts will continue to provide good jobs with good wages. We will continue to invest in our community by employing people, and supporting nonprofit organizations that seek to improve the lives of Nevada citizens.

But the pursuit of greatness is a continuous, collective endeavor – not just MGM Resorts’, not just the gaming industry, not just one elected official, whether he/she is the governor or a legislator, or a Commissioner.

Our success is not just one citizen or citizen group.

Rather, it is the responsibility of all of us, and together we can shape and reshape the destiny of Las Vegas as one of our world’s greatest centers of humanity.

Jim Murren is chairman and CEO of MGM Resorts International.