Tag Archives: Economics

U.S. travel industry stagnate but going in the right direction

About 80 marketing executives, many from the major Las Vegas casinos, met Sept. 29 to consider potential growth for and obstacles to the city’s ability to draw international tourism.

“The U.S. travel industry generates $2.1 trillion in economic output and supports 15 million jobs. Tourism is Southern Nevada’s No. 1 industry, supporting 368,900 jobs (41.4 percent of the workforce) and generating $51.8 billion in aggregate economic output.”

That was the opening statement of Roger Dow during a breakfast presentation to the Las Vegas chapter of the Hospitality Sales and Marketing Association International. Dow is the president and CEO of the U.S. Travel Association, an organization that represents all segments of travel in America.

“I keep saying that hospitality, lodging and the travel industry is the front door to economic development. No one ever decided to buy a second home or condo here (Las Vegas) until they first came here for a meeting, event or a vacation. Then they realize wow, pretty cool, lots to do, great restaurants, all these things,” Dow said.

In his talk, Dow outlined how international travel has improved for the hospitality industry and listed some hurdles to be overcome.

On the positive side was the improvement of visa wait times. In the past, the waiting period for a three-minute visa interview was 120 days. That has been shrunk to fewer than five days, and, as a result, the number of international visitors went from 53 million in 2009 to 77 million in 2015. That number is expected to climb to 100 million by 2021.

In addition to improving the visa wait times, the U.S. also expanded the number of countries enrolled in the Visa Waiver Program from 27 to 38. This program enables most citizens or nationals of participating countries to travel to the United States for tourism or business for stays of up to 90 days without first obtaining a visa when they meet all requirements.

One of the best examples is South Korea. When it was added to the Visa Waiver Program, visitation went up 46 percent in 18 months. An additional 400,000 South Koreans visited the U.S., making an average of 850,000 to 900,000 visitors each year.

One of the most important business and tourist countries in the world is China. In 2009, there were 500,000 Chinese visitors to the U.S. By 2015. that number was 2.2 million, and it is expected to grow to 5 or 6 million visitors each year. China is not one of the countries in the Visa Waiver Program, but the five-day visa processing program has helped to bring more tourists. In addition, a Memorandum of Understanding was signed with China to allow for 10-year business visas. This means that a Chinese businessman that comes to Las Vegas each year for the CES only needs to apply for a visa every 10 years, making it easier for China to do business in the U.S.

Recently, the Las Vegas Convention and Visitors Authority recognized how important the Chinese visitors will be to the lcoal economy and launched a campaign asking local businesses if they are “China ready.” The program talks about the need for improved signage, menus and guest relations personnel that speak Chinese languages.

Challenges that the travel industry faces include:

■ Infrastructure: This must grow to be able to move people throughout destinations. “The problem is the government keeps ‘kicking the can down the road,’ which stifles cities’ ability to grow and properly accommodate incoming travelers,” Dow said.

■ Ability to process people through airports: More travelers should utilize TSA precheck programs.

■ Customs and border protection: The U.S. needs to continue advancing technology including automated passport control and facial recognition.

■ Airplane capacity: In 2006, 11 airlines controlled 85 percent of air traffic in America. Now, there are four legacy carriers: Delta, American, United, and Southwest. “I want them to grow, but we can’t have four airlines controlling our destiny,” Dow said.

■ Improve load factors: Legacy carriers are projecting only 2 percent growth, yet international visitation is predicted to grow by 4 to 6 percent per year. The numbers don’t match, and carriers will stifle visitor growth.

■ Pandemics: The government and the media need to do a better job of identifying the exact areas affected by an epidemic and not make it sound like an entire state, region or country is affected.

The good news for the hotel industry is that, nationwide and in Las Vegas, the number of visitor days has not declined, but the amount of money spent during those stays has. Dow notes that “people are spending less on a hotel room. Instead of purchasing two Gucci bags, they are buying one. Instead of going to a 4-star restaurant, they are going 3-star.”

While nationwide the travel industry is flat, only growing at about 2 to 3 percent at this time, projections are for improved growth.

While business travel is very important to the economy, two-thirds of the travel and hospitality industry is for leisure activity.

One of the main reasons for the stagnated growth is the fact that Americans are not taking vacations. Americans have become what Dow calls “a nation of work martyrs.” In 2000, Americans took 23 days of vacation time. In 2015, that figure dropped to 16.2 days. Millennials, according to Dow, are the “worst offenders.” Because of the challenging work market, “they’re terrified of losing their jobs and want to look good.”

Furthermore, the USTA surveyed children, ages 6 and 7:

■ 75 percent say their parents never disconnect from the office when they come home.

■ 61 percent say the best time they spend with their parents is when they’re on vacation.

■ The surveyed children said, at least three days per week, their parents promised they would be home but were not.

To encourage Americans to take more leisure time, the travel and hospitality industries have teamed up to build a campaign called “Project Time Off,” producing a series of public service announcements touting the social and health benefits, physical and mental, of leisure activities.

MasterCard has committed $80 million to its television campaign where children ask their parents to take a vacation.

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Recession done; better days ahead

“I am tired of talking about the recession! The recession is over, and Las Vegas is moving forward.”

That was the message delivered by Jeremy Aguero, principal of Applied Analysis, during the 2016 Las Vegas Perspective presentation June 16.

Aguero, an economic analyst, posed a series of “What if” scenarios, asking what Southern Nevada would look like if it attained certain levels in education, employment, and other economic indicators. The questions were mostly rhetorical; he posted slide after slide showing that Southern Nevada had already met or exceeded his proposed benchmarks.

In the past year, Las Vegas ranked fifth among metropolitan areas in the nation for population growth.

Clark County has recaptured nearly all of the jobs that were lost during the recession. The state employs 936,100 people, just 700 fewer than were employed in May of 2007. The area has achieved that employment growth with 50,100 fewer construction workers.

“At the height of the construction boom, we were building homes for the construction workers that were building them,” Aguero said.

Taxable retail spending is at its highest level ever at $38.8 billion. Average hourly earnings are up 15.9 percent since January 2007 at $22.43, ranking Nevada as the having the nation’s fourth-highest hourly wage.

The number of business in Clark County grew by more than 2,000 in 2015 for to 53,468.

Besides the record number of visitors, increased visitor spending and convention revenues, Aguero also described educational achievements.

In the past year, the Clark County School District has had three National Merit Scholarship winners and been named as a College Board AP District of the Year. Vanderburg Elementary ranked in the top 50 best public elementary schools in the nation while Palo Verde High School was named an International Baccalaureate World School and both Bonner and Dooley Elementary were named National Blue Ribbon Schools.

Meanwhile, a panel discussion with Bo Bernhard, executive director, UNLV’s International Gaming Institute; Marcus Prater, executive director, Association of Gaming Equipment Manufacturers; and Christopher Oh, vice president of strategic operations for MGM Resorts International, highlighted how the gaming industry has changed and continues to change.

“Twenty years ago, more than 60 percent of the profits came from gaming,” Oh said. “In 2015, almost 65 percent of the Las Vegas resort industry’s revenue came from nongaming activities such as hotel room rates, nightclubs, pools, and dining. By its self, the Hakkasan nightclub at the MGM Grand generated over $100 million in 2015.”

Besides the hotel-casinos, many other businesses support the gaming industry, including gaming equipment manufacturers. Prater said Southern Nevada’s gaming suppliers and manufacturers have annual sales revenue of around $7 billion and employ about 16,500 people who earn about $1 billion annually.

Oh predicts that the casino floor will look different in 20 years, partly because of millennials.

Bernhard said millennials dislike the current slot machine options. To remedy that, skill-based gaming could be developed with variable payback winnings based on the player’s skill level.

The newest trend in gaming is e-sports, in which an audience watches two people play video games. Competitions are held across the country with prize money ranging from $10,000 to $7 million. Analysts estimate that there is a global audience of 100 million fans watching teams of players compete for the top dollars.

Gaming manufacturers and hotel-casinos want to take advantage of this trend and add skill-based gaming to the casino floors.

This was the 36th year for the Las Vegas Perspective presentation. It was started by the Nevada Development Authority, which rebranded as the Las Vegas Global Economic Alliance.

The 208-page book of statistics about every public and nonprofit agency, major employers, housing, and other economic drivers in the Southern Nevada region is available online at https://www.lvgea.org/sponsor-the-perspective/, for $50.