Tourism: Things Could Be Worse -- You Could Be Nevada

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I saw something today that made me realize how bad things are in Nevada: the cash-strapped Nevada Commission on Tourism canceled its annual meeting next week — to save money.

From the Associated Press:

“It’s a huge deal and it was an extremely difficult decision to make,” Lt. Gov. Brian Krolicki said Wednesday. “This conference was going to lose money and essentially by canceling, we are losing less money than if we went forward.”

The financial losses are no joke, the budget shortfall for the state is about $340 million and Gov. Jim Gibbons is contemplating folding the state’s tourism agency (and budget) into another department.

The body count: McCarran Airport, Las Vegas’ airport near its famous Las Vegas Strip, dropped 500,000 visitors in October, year-over-year. The state’s taxation department, which tracks restaurant and bar tabs, said those sales also dropped 19.6 percent in September, year-over-year, the latest statistics on record. And, in case you didn’t think it could get worse, the state’s unemployment rate rose to 7.6 percent, the highest since 1985, and is expected to rise to 8.6 percent next year.

The economy: An economic forum on Monday projecting $5.7 billion in revenue for the state wasn’t good news. Instead, it revealed the state didn’t have enough money – $1.2 billion – to keep going as-is. Nevada already tapped into reserves and cut budgets to make up for financial losses in the last two years, so news that the state will continue to hemorrhage cash seemed bleak:

In developing the estimates, forum members heard a report from . . . an economic consulting firm, that Nevada’s tourism-dependent economy isn’t likely to recover before 2010.

I’m not sure if there was a collective gasp, but if I were in the tourism industry and read AP’s account, I think I would have run screaming from the room. (One news agency said officials were reportedly “stunned.”)

Again, Nevada is the eye of the storm in this battered tourism economy, and it seems Nevada’s only option is to continue to ride it out.

Tags: Nevada, State, Financial Accounting, Advertising & Promotion, Finance, Marketing, Barbara E. Hernandez

Bay Area resident and award-winning business journalist Barbara E. Hernandez has covered tourism, real estate and personal finance. Her clients include the New York Times, Los Angeles Times, San Francisco Chronicle and Washington Post.

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1

NeonAndBeach

12/05/08 | Report as spam

RE: Tourism: Things Could Be Worse -- You Could Be Nevada

If I may, many of the stats you mentioned were more indicative of the implosion of the local economy that has nothing to do with tourism. Almost everything noted has to do with the housing crisis and construction industry screeching to a halt.

The popular notion outside Nevada is that we have a tourism economy. In reality, we had a "growth" based economy based on the 5-6000 people a month that were moving here. Hotels aren't empty, but plenty of mini-malls around town are. Why?

Southern Nevada's population has quit growing. Period. For the first time in some 40 years, we had actually lost residents. Those still here are more likely to be out of work and hence not flying anywhere. Don't forget that in a city of 2 million (and especially one where almost everyone is a migrant with family and friends elsewhere in the country), a significant portion of airline traffic will be locals.

Per the Nevada Commission On Tourism: That agency could vanish tomorrow with no impact on tourism. It is nothing compared to the Las Vegas Convention and Visitors Authority (LVCVA) and the LVCVA budget of $294 million per year. That is no type. The LVCVA budget alone equals about 5/6 to the entire shortfall for the state. (Yes, government is looking at the possibility of moving some of that money around, but for now it is still spent promoting Las Vegas).

Drops in taxable sales are the result of the poor local economy just as much as they are reduced tourist spending. A couple of major car dealerships have actually CLOSED here in the past few weeks. Ironically, our shortfall is much more manageable then our neighbors to the west in California. Nevada isn't on the verge of insolvency.

Las Vegas is feeling a tourism pinch, but a minor blip in the road. Lower hotel rates are keeping our hotel occupancy at levels other cities would envy during good times. Gaming stocks have taken a beating, but that has more to do with gaming companies over-spending on massive new building projects like MGM CityCenter. If gaming companies hadn't gone on unsustainable spending sprees during the boom, they would be weathering this mild downturn with no problem.

This isn't the first soft economy that had Las Vegas discounting rooms. Everyone made it through 2002 OK and the 90's weren't exactly boom times here either. Now that growth has stopped, government spending projections will be adjusted and the state will be fine. Even if the Nevada Tourism Commission is a permanent cut.

Ted Newkirk
Managing Editor
AccessVegas.com
2

barbara e hernandez

12/05/08 | Report as spam

RE: Tourism: Things Could Be Worse -- You Could Be Nevada

Actually, the last link talks about the problems regarding Nevada and its housing industry, so I hear you on that. Similarly, South Florida and Phoenix are having tough times.

Thanks for writing! Are you interested in doing a a post that says all that you said here and maybe a paragraph more? I rarely suggest it, but your points are so clear and readable, I think they should be made more available to our readers.

If so, hit the button at the top, right under BNET Travel where it says, "Submit Your Own Post."

Thanks, again!