Tourism threats from all sides

Northern Nevada tourism could be in

serious trouble if local businesses and civic

leaders don't take quick action, warned

speakers at last week's Governor's

Conference on Tourism in Reno.

Industry speakers cautioned local leaders

about several threats, including tribal

casinos in neighboring states, and admonished

them for not having already done

something to reinvigorate northern

Nevada.

"Las Vegas reinvents itself every few

years," said Frank Fahrenkopf, president

and CEO of the American Gaming

Association in Washington, D.C. "I wish

you'd do that here in Reno. This area

hasn't done what it should. People in

northern Nevada say we don't want to be

Las Vegas. You're not. But I wish there

were more of that entrepreneurial spirit

here that's in southern Nevada."

Dr. William Eadington, professor of

economics and director, Institute for the

Study of Gaming, University of Nevada,

Reno, delivered a similar message. He said

Nevada-style entertainment is gaining in

popularity and the state has the advantage

critical mass over its competitors,including

legalized gaming in other states and on

Indian reservations.

On the positive side, Reno has made

substantial public sector improvements such

as the refurbished convention center and a

rejuvenated Truckee River, he said. But

gaming here continues to be weak, said

Eadington, and that's led to no new investments

in the area and a perception that

there's no reason for visitors to return once

they've seen it.

"The question is, will the patient survive?"

asked Eadington.

Eadington cited statistics showing that

gaming in Washoe County dropped in 21

of the last 24 months.

"That is pretty disturbing when you consider

that most of the Indian casinos in

northern California haven't been built yet,"

said Eadington.

Since Indian gaming was launched in

March 2000, California tribes have opened

45 casinos now generating $5 billion in revenues,

he said, already half the size of

Nevada's 70 year-old industry.

"California will exceed Nevada within 10

years," said Eadington.

Most of the new growth in California

Indian gaming will come in the northern

part of the state, said Anthony Miranda,

president of the Pechanga Development

Corp. and executive board secretary for the

California National Indian Gaming

Association.

Despite that, Miranda said Indian gaming

isn't a threat to Nevada.

"Can the tribes compete in the Nevada

market?" he asked. "I don't think so.Ours is

a local market.We don't have the density

you have. You have a tremendous advantage

in that."

But the local markets for northern

California tribal casinos consist of the visitors

that now travel to northern Nevada to

gamble.

In March, the California tribes are renegotiating

their compacts with the state, in

which they hope to raise the cap on the

number of slot machines each casino can

operate. Right now, the Indian casinos are

allowed 2,000 slots and Miranda said there's

been talk the limit may be upped to 5,000.

"Fighting the growth of Indian gaming

is a futile battle," said James Baum, corporate

director of development at Harrah's

Entertainment.

Harrah's strategy is to partner with the

tribal casinos, said Baum. The company

already has $400 million invested in Indian

gaming projects,including Harrah's Rincon

in San Diego, Harrah's Ak-Chin in

Phoenix,Harrah's Prairie Bend in Mayetta,

Kan., and Harrah's Cherokee in

Cherokee,N.C.

But Baum conceded that Indian gaming

is "a double-edged sword," for Harrah's.

Tribal casinos aren't the only gaming

threat to Nevada's tourism industry, warned

the gaming association's Fahrenkopf.

Racinos race tracks with slot

machines and/or video lottery terminals

constitute a booming business, he said.

Such operations are legal now in six states

Delaware, Iowa, Louisiana, New

Mexico, Rhode Island and West Virginia

and 10 other states are contemplating

legalizing them.

And there's potential for even more racinos

since pari-mutuel betting is legal in 43

states.

In 2001, racinos were a $2.1 billion business,

earning $578 million for local and

state governments.Taxes generated by three

racinos in Iowa, for example, represent 2

percent of that state's budget, said

Fahrenkopf. In West Virginia, which has

four racinos, the operations' taxes make up

10 percent of that state's budget. In

Delaware, three racinos bring in 8 percent

of the state's budget.

And racinos have garnered the attention

of Harrah's Entertainment, Park Place

Entertainment, Boyd Gaming Corp. and

Penn National Gaming, all of which have

investments in various tracks.

At the conference, state representatives

and tourism officials said they are working

hard to expand Nevada's appeal beyond

gaming.

"Help us carry the message of the repositioning

of this area," said Jeff Beckelman,

president and CEO, Reno-Sparks

Convention and Visitors Authority. "There

is an abundance of recreational opportunities

here, including gaming."

The primary emphasis is on sports and

outdoor recreation through a campaign to

promote the state as an adventures destination.

To that end, the biggest event of the

conference was the announcement that the

ESPN Great Outdoors game will be held

in Reno in 2003. (See story, page 3).

"The adventure campaign was a bold,

risky move," said Lt. Gov. Lorraine Hunt.

"Now we're finally marketing the state as a

whole. Nevada is the only place you can

come and have myriad adventures."

Another avenue is international tourism.

"The international market is going to be

key," said Hunt, who went on a tourism

promotion trip to China in March. "China

is going to be our next market. It's

untapped and there are literally millions [of

potential tourists] there."

William Norman, president and CEO

of Travel Industry of America, agreed.

"Eighty percent of Americans already

travel," said Norman. "Where will the

growth come from? International."

But international travel is down,

although it is expected to rebound, and it

almost exclusively benefits Las Vegas.

International travel to the U.S. had its

biggest decline ever last year, from about 50

million in 2000 to just under 46 million in

2001, said Dave Averne, tourism development

with the U.S. Commerce

Department. And dollars spent by foreign

visitors dropped from $103 billion to $91

billion.

"But ninety-one billion is still a huge

chunk of change," said Averne.

The Commerce Department expects

international travel to make a comeback,

and grow 32 percent between 2001 and

2006.

International visitors spent $2.9 billion

in Nevada in 2000, the last year for which

the Commerce Department has numbers.

About 42 percent of those tourists come

from Asia/Pacific and a third arrive from

Europe.

But most depart in Las Vegas, and never

travel to northern Nevada. For one, the

average stay is 3.7 days, too short for most

travelers to do much more than visit Las

Vegas, said Jo-Anna Palmer, account manager,

Gate 7 Pty. Ltd. in Sydney, Australia.

Japanese visitors, for one, might come for

skiing, said Kyosuke Okada, president,

Okada Associates in Tokyo, but Canada

offers very competitive ski packages that are

hard to beat.

Sonia Sook Ny Hu Hong, who promotes

Nevada tourism in South Koreas as

managing director of International Tourism

Network in Seoul, did say northern

Nevada's efforts to reposition the area as an

outdoor playground were on the right track.

"I'm really glad Nevada took on an

adventure campaign," said Hong. "It will

help push into Reno because Las Vegas has

all the gambling."