LV convention growth slowing

Torrid first-quarter convention attendance in Las Vegas should slow for the remainder of 1999, gaming analyst David Anders says.

The Credit Suisse First Boston executive says Las Vegas convention business should grow 10 percent in 1999. But most of the increase will be due to the 36 percent jump in convention attendance in this year's first quarter from the year-ago period, Anders says.

Convention attendance will be about level in the second, third and fourth quarters compared with the 1998 periods, he said. First-quarter operating results were skewed this year due to strong midweek room rates generated by the sharp increase in convention business.

Because convention attendees represent about 11 percent of total Las Vegas visitors, he says, the total number of free and independent travelers (FIT) must increase 17 percent this year to make current earnings and cash-flow estimates for Strip casino operators.

As a result, Anders says, CS First Boston "maintains our cautious stance on Las Vegas given the significant increase in (room) capacity from the openings of Mandalay Bay, the Venetian and Paris-Las Vegas."

The openings of Bellagio last October and Mandalay Bay this March have boosted demand for weekend visitation, with weekend room rates for low-end casinos up 11.2 percent and for high-end operators up 10.2 percent in the past five month, Anders says.

Still, midweek room and occupancy rates trail weekend numbers by a substantial margin, Prudential Securities analyst Joe Coccimiglio says.

In 1998, average hotel and motel weekend occupancy ran at 92 percent, while midweek occupancy was 83 percent. The disparity has prompted many Strip casino operators to push their convention business to fill the slower periods.

Coccimiglio says MGM Grand, for example, plans to boost the percentage of its rooms sold to conventioneers to 25 percent from 15 percent, while Mandalay Bay expects to sell 15 percent of its rooms to convention attendees in 2000, up from about 8 percent this year.

The Venetian, which is connected to the Sands Expo & Convention Center, plans to sell 50 percent of its rooms to conventions, Coccimiglio says.

He notes that convention attendance rose to 3.3 million in 1998, a 5 percent compound annual growth rate from 1994. Coccimiglio expects the 1.5 million square feet of new convention space being added to the Las Vegas market will allow the business here to outpace convention growth domestically.

To do that, he says, Las Vegas must influence conventions and trade shows to change venues, "particularly from Chicago," by promoting the entertainment, dining, shopping and other attractions being added to this market.

archive