Preview Las Vegas
Inside Liberty Watch Today - January 31, 2007

This year's prognostication season kicked off last week with Preview Las Vegas 2007 at the Thomas and Mack. Although more than one speaker called it Vegas' "preeminent forecasting event," it is more like a huge happy hour, sans the booze, but with a loud monotonous techno soundtrack and flashing lights.

The presentations take a back seat to the hyper-networking, causing Preview to start and finish behind schedule. The event is already packed with razzle-dazzle and fluff, forcing those who are there for the information to sit for more than four hours to receive a couple hours worth of presentations.

Local music group Mosaic, who is currently opening for George Wallace, was even there to sing a hip-hopped version of the National Anthem to start the show and provided their version of a couple Sly and the Family Stone tunes to start the second half of the event later. The program was also spiked with infomercials from Preview's Platinum sponsors, meaning that the crowd was forced to suffer through another campy "Ask Bill" commercial starring ubiquitous Nevada State Bank President Bill Martin.

Las Vegas Convention & Visitors Authority Rossi Ralenkotter told the crowd where all those room tax dollars are spent, but, he emphasized that other cities are out-spending Vegas 15 to 1 to attract tourists. The nation's top ten cities are spending a combined one billion dollars plus, and New York, Chicago and Phoenix are combining to build nearly two and half million square feet of convention space to compete with Vegas.

But Las Vegas has a brand name like no other city. Only Google has a more prominent brand. Last year was a new record for visitors, with 38.9 million people coming to town. Hotel occupancy was 89.8 percent, the highest since 1989. But, Ralenkotter pointed out that there were only 67,000 rooms in Las Vegas in 1989, compared to 132,000 today. But, not for long, by 2010, the city will have a 171,000-room inventory. Which means the marketing of Las Vegas must continue full speed: 200,000 new visitors are needed annually to fill each new 1,000 rooms. This year is the year of sports according to the LVCVA chief. The NBA All-Star game is a couple weeks away, Grand Prix racing to coming to downtown, the FIBA Championships will be held here, along the with NASCAR, NFR, pro golf and tennis.

Looking into future, Ralenkotter thinks 39.3 million folks will show up this year and in 2009, there will be 43 million visitors. He predicted that by 2010, there would be 13 million square feet of convention space here compared to 9 million now.

But it wasn't all rose-colored glasses talk from Rossi. I-15 and McCarren Airport are nearing their capacities. International travelers are avoiding the United States and although he didn't mention the TSA, those folks certainly aren't enhancing the "positive experience" Las Vegas is trying to provide its guests.

Numbers man Jeremy Aguero walked the crowd through his top ten economic issues concerning southern Nevada. Aguero started with the point that Nevada has a low tax climate: ranked 4th in the country. Of course this is a positive for Las Vegas, and Aguero recognizes this, but ironically, as a member of Kenny Guinn's Task Force on Tax Policy a few of years ago, he argued for more taxes. What really benefits the state, despite increased taxes is that our neighbor next door, California, is ranked 45th in tax climate.

Strip investment drives the Las Vegas economy and there is $33 billion worth of projects on the Strip with announced completion dates under way. Include projects without announced completion dates and the amount grows to nearly $49 billion. As Richard Lee would point out later in the program, in the 15 years from the building of the Mirage to the completion of the Wynn, there was $15 billion spent on the Strip. There will be double that (or more) invested over the next five years.

Besides resort investment, population growth drives the Las Vegas economy. In 1980, 463,000 people lived here, now it's 1.9 million. Aguero points out that drivers license surrenders have slowly drifted down since 2003, and the 4th quarter of last year saw the fewest number of turn ins since 1999. But, in migration is still healthy, and the Las Vegas valley is expected to have three million residents by the year 2020, with the majority of those residents being minorities.

Many assume that the jobs being created here are for the hotel industry. Not really, Aguero pointed out that business and professional services employment is the fastest growing job category, growing 13,000 jobs or nearly 12 percent. Leisure jobs only grew two percent last year. Las Vegas is still very dependent on the construction industry for employment with 12.3 percent of the workforce in building, which is double the national average.

Aguero's most interesting point concerned housing. Although there is eights months worth of inventory on the market, double what it should be, there were the fewest number of residential permits pulled in the fourth quarter since 1993. The ratio of employment growth and residential permit activity may be poised to rise, according to Aguero. Generally, a healthy ratio is 1.3 new employees for every new housing unit. But right now, employment is growing at 5 percent while permits are down 25 percent.

It's not likely that employment growth will slow down with all of those high-rise cranes dotting the horizon. In Aguero's view, homebuilders need to bring more homes to the market to avoid another huge run-up in prices.

Featured speaker Marcus Buckingham had nothing to say about the Las Vegas economy, but much to say about "building on your strengths and managing around your weaknesses." Buckingham used to work for the Gallup Organization, but now he writes books, is a management expert, and is a brilliant speaker. The charming Brit explained that we live in a remedial world, and that it's simply the wrong approach.

When asked what the best path to success was: work on weaknesses and maintain strengths, or leverage your strengths, six years ago only 41 percent of Americans said: leverage your strengths. A just completed poll says that number has now dropped to 34 percent. Obviously, Buckingham's view is not being embraced.

The keys to success, according to the best-selling author, are to understand that there are three myths that must be erased. The first myth is that as you grow your personality changes. That's simply not true. Buckingham explained if you want proof go to your next high school reunion. The truth is that as you grow, you become more of whom you already are.

The second myth is that you grow the most in your areas of greatest weakness. In reality you grow most in your areas of greatest strength. And the third myth is that a great team member puts his strengths aside and does whatever it takes to help the team. The truth is that a great teammate volunteers his strengths to the team most of the time.

Buckingham received a much-deserved standing ovation at the end of his presentation.

As host Billy Harris told the crowd of 1,800, many people attend Preview just to hear Richard Lee. The VP of Public Relations at First American Title told the crowd that he thought the housing market would be back on track by 2008. There is only seven years worth of land left to develop in the Vegas Valley, that world-class wealth is coming to town and there is great opportunity for those who make the pie bigger, rather than just getting a share of the pie.

Lee quickly outlined what was happening on the four Strips. The Fremont Strip will benefit from the huge expansion of the World Market Center as it expands to 12 million square feet downtown. The Strip is dominated by MGM's 18 million square foot CityCenter project, "a tsunami wiping out everything in its path until it gets completely absorbed. You'd better have something unique to compete," Lee said. The highest-end residential project in CityCenter, the Mandarin Orient is already sold out according to Lee, and another product is half sold. MGM spent $24 million on a temporary sales office at the site.

The South Strip will emerge rapidly as more gaming properties are built to join South Point and condo projects are completed. The South Strip will be geared for the locals, according to Lee. The West Strip includes projects like condo project Panorama and the proposed development around Palace Station.

For those who believe the city of Las Vegas has seen its best growth days, one man that Richard Lee interviewed disagrees. The MGM's Jim Murren believes Las Vegas "will skyrocket in prominence globally," and because of that the city's "population growth will accelerate."

That's coming from a guy whose company is betting $7 billion dollars on it. Maybe you should too.

Doug French, Liberty Watch Columnist


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