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Cracks Beginning to Show in the Multibillion-dollar
 Las Vegas Convention Industry
By Benjamin Spillman, Las Vegas Review-JournalMcClatchy-Tribune Regional News

Oct. 18, 2008 - Cracks are beginning to show in the multibillion-dollar Las Vegas convention industry, which had managed to deliver increased attendance in five of the first eight months this year despite the growing downturn.

Trade show and convention attendance tumbled 22.3 percent in August and year-to-date attendance for 2008 is down 3.4 percent, according to the latest figures from the Las Vegas Convention and Visitors Authority.

The economic impact of conventions -- which reaches about $8 billion annually in Las Vegas -- is down 7.3 percent through August, a number that reflects how convention-related spending ripples through the local economy.

Properties with a heavy dose of convention business are being forced to adjust to the sudden arrival of hard times.

Richard Harper, vice president of sales and marketing for Mandalay Bay, says bookings are coming on shorter notice. That's leaving properties with less notice to fill rooms left vacant by no-shows.

"The sooner people book their rooms, the better life would be for all of us," Harper said. "It is the wait-and-see factor that is making things difficult for us."

Lower attendance levels mean convention venues are seeking ever-smaller events to fill leftover hotel inventory, Harper said.

"Even if it is 30 rooms at a time, we are happy to accommodate that," he said.

The authority, which owns and operates the Las Vegas Convention Center, has already enacted a hiring freeze and is keeping open positions vacant in response to a decline in room tax revenue.

Authority officials sensed the downturn as long ago as May. That's when the authority's vice president of finance, Brenda Siddall, told the board of directors she was lowering projected revenues 3.5 percent.

About 80 percent of the authority's revenue comes from room taxes and 16 percent is from the convention center.

At the most recent authority meeting this month, Siddall suggested more budget revisions are on the way.

Through August, the authority reported 15,344 conventions with a combined attendance of 4.5 million and an economic impact of $5.97 billion. The figures represent declines of 2.3 percent, 3.4 percent and 7.3 percent, respectively, from the 2007 pace.

But spokesman Vince Alberta says layoffs aren't yet in the cards, despite the hard times.

"We have had no layoffs, nor are any planned," Alberta said.

Representatives of the Service Employees International Union and Culinary Local 226, which combined represent hundreds of convention center workers, say they haven't heard of job losses at the venue.

The situation in Reno is direr. In late September, the Reno-Sparks Convention and Visitors Authority laid off 16 people. Officials there attributed the job cuts to a downturn in tourism and convention business that prompted them to trim $4 million from a $46 million annual budget, compared with a budget of nearly $220 million for the Las Vegas authority.

Hard times aren't confined to Reno, though.

In April, company officials at GES Exposition Services, a leading convention and trade show contractor, announced plans to reduce its Las Vegas work force.

At the time they didn't say how many jobs they would cut from the company's roster of 750 Las Vegas employees but told investors during a conference call the savings would amount to $1 million to $10 million in savings that would show up on the bottom line in the third quarter.

Company officials wouldn't comment Friday on whether they went through with the plan, but did say there could be more information available next week during a conference call on third-quarter earnings.

Steve Hagstette, regional vice president for Nevada for Freeman, another leading trade show contractor, said the downturn is beginning to show up on balance sheets and in lower demand for temporary workers.

"I can tell you right now we are behind budget by several million dollars as far as revenue," Hagstette said. "I can't say when it will affect the full-time staff. That depends on whether we keep falling off on the revenue figure."

The first workers to feel the pinch of a downturn are temporary workers such as carpenters, electricians and forklift operators who set up and break down shows.

At Freeman, the work force may range from 150 people or fewer to 650 to 1,000 people combined at the company's warehouse and out on show sites, Hagstette said.

The company's full-time Las Vegas staff numbers about 300, he said.

And, in the long term, Freeman remains bullish on Las Vegas conventions. It is set to begin construction on a 412,000-square-foot warehouse at West Sunset Road and South Rainbow Boulevard.

"Vegas is still the convention city for the country," Hagstette said. "(Other cities) would love to have close to what we have here."

When exhibitors cut back it isn't just construction and setup workers who are affected.

There are few, if any, cities with as many banquet servers, bartenders or busboys who make a living as "extra board."

That's a job classification for people who don't work for a particular organization, choosing instead to hop from one event to another, depending on where work is needed.

During high times, life as an extra board worker can be hectic and lucrative. But such careers are also very sensitive to the impact of recession.

"Las Vegas is unique as a place where you can do that as a full-time job," said Gordon Absher, a spokesman for MGM Mirage. "Those are the folks who are going to see the impact first."

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To see more of the Las Vegas Review-Journal, or to subscribe to the newspaper, go to http://www.lvrj.com.

Copyright (c) 2008, Las Vegas Review-Journal

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