As business travelers flood Las Vegas this week to attend CES to test out the latest gadgets and technology, members of the meeting and convention industry will also be taking notice — looking for signs of a recovery as it tries to recapture its pre-pandemic-level of convention business.
Concerns over the impact of COVID-19 on business travel has instead evolved to fears of inflation’s impact and the economic uncertainty stemming from the series of rate interest rate hikes by the Federal Reserve. But most industry insiders say Las Vegas has yet to show anything other than growth as it approaches sales and enthusiasm nearing 2019 levels.
Corporate event activity is a key piece of Las Vegas’ economy since business travelers fill rooms midweek and spend more per trip on average, compared to a leisure visitor, according to research from the Las Vegas Convention and Visitors Authority.
In 2021, convention visitor spending contributed an estimated $2.5 billion in direct economic impact and up to $4.3 billion in indirect economic impact.
“That’s why the convention segment and the business segment is so important,” Josh Swissman, founding partner of Las Vegas-based Strategy Organization, said. “They book so far in advance. It’s a great bellwether to general economic health and interest in Las Vegas. It’s also good because that’s a big chunk of rooms that sits on the books that allows hotel operators, casino operators to yield the room rates from.”
Higher costs have yet to deter business
Some resort operators and the LVCVA say bookings and a schedule of corporate events that has grown annually since lockdowns suggest a strong kick off to 2023. While businesses and individuals may feel the pinch of inflation, the business traveler isn’t avoiding Vegas trips just yet.
“What they may do is try and save money elsewhere and trade down when it comes to fancy dinners — stay in a hotel room that’s a little bit less expensive,” Swissman said. “But it’s not to the point where business travel in terms of volume is impacted.”
Others in the industry are watching reports of businesses that limit or cut travel in response to economic pressure.
Bob Maricich, CEO of World Market Center, said the start of the biannual furniture showcase and gift and decor show Las Vegas Market on Jan. 29 will be one to watch for recovery.
Last year’s winter event was 75 percent to 80 percent recovered, he said. This year’s attendance could be back to pre-pandemic levels while business for The Expo, an extra 315,000-square-foot venue that opened in spring 2021, is growing “quite rapidly.”
“With the smaller buyers, the cost of air travel, if they can afford it, (and) the cost of lodging has really caused a lot of them to pause,” Maricich said. “If it’s after the holiday selling season and they need new product, they’re going to come. But the high cost of air travel and lodging is a deterrent to some degree.
“That said, we have not experienced any cancellations — and maybe an element of this is that people just have to travel to meet their business needs. The cost has been something that’s been voiced.”
A survey of 100 global corporate travel managers by Morgan Stanley found overall travel budgets are, on average, almost fully recovered to 2019 levels. Higher airfare isn’t dragging down bookings, but it could make people trade down for less expensive options.
That’s where CES comes in. Amanda Belarmino, assistant professor at UNLV’s William F. Harrah College of Hospitality, said the massive trade show, held the first week of January, gives a glimpse at business travel booking sentiment.
Last year’s show was greatly subdued because of the omicron variant of COVID-19, which led to a surge of new COVID cases. Organizers saw a 70 percent drop in in-person attendance and closed the event one day early. But it was progress compared to 2021 when the show was a virtual-only event and was held six months after the convention industry restarted following lockdown measures.
This year’s show returns Thursday and is 50 percent bigger than 2022, taking up 2.2 million square feet and an expected attendance of 100,000 people.
“CES has always been a good bellwether for us, and I suspect that how CES performs will be a good predictor of business travel for the rest of the year,” Belarmino said in an email.
Business travelers return throughout 2022
CES’ COVID-19 troubles were among the last major disruptions. The meeting and convention sector recovered about 75 percent of pre-pandemic levels of business in 2022, according to the LVCVA. It was the first full calendar year of shows because 2021’s trade show calendar picked up once restrictions were lifted in the summer.
Lori Nelson-Kraft, LVCVA’s senior vice president of communications, said the Las Vegas Convention Center hosted 56 trade shows with an estimated 850,000 attendees. And none of the booked events or trade shows, often scheduled several years in advance, canceled.
International business travel was also boosted in 2022 after the Biden administration dropped a rule requiring inbound travelers to test negative for COVID-19 the day before a flight.
“That was truly a barrier for some of the exhibitors in the meeting and convention sector because it’s a big investment of bringing your team, constructing your booths and putting all that energy towards being able to display and go after sales deals, if 24 hours in advance, you test positive (and) you’re not allowed to come into the States,” Nelson-Kraft said. “When that was lifted, that really was that last piece to give our international visitors who come here for business travel the opportunity to start really planning and getting those trips off the books.”
By the third-quarter earnings season, executives spoke highly of the returning activity in its meeting and convention business. For instance, MGM Resorts International Chief Financial Officer Jonathan Halkyard said during an investor call that occupancy reached 93 percent for the quarter — the highest since the start of the pandemic — and attributed the gains to midweek demand increasing. In the same quarter, Wynn Resorts Ltd. CEO Craig Billings said the segment had noticeably improved since the beginning of the year.
At The Venetian, the sales team noted a remarkable pickup rate in bookings that year, Chief Sales Officer Tony Yousfi said. Groups were conservative with the blocks reserved but “overachieved by a record pace,” he said.
Bullish on business travel for 2023
Expectations in the new year are strong and supported by a full event calendar, targeted at both business and leisure crowds. The LVCVA expects it will host 54 trade shows and 1.3 million estimated attendees, powered by the growing return of its biggest shows like this week’s CES and the construction trade show Conexpo-Con/Agg, which is held in Las Vegas every three years.
The Venetian, meanwhile, said the volume of its room night bookings for group travel are increasing at a record pace. The property is starting the year with more convention room nights booked in its history, Yousfi said.
While firms have to adjust their budgets for inflation, the demand to meet in-person is still there. His sales teams are working to keep a solid base of convention business to support the property if other segments decline.
“We haven’t felt like this since 2018 and 2019,” he said.
Some think leisure and other sporting events could buoy any potential cuts by firms traveling to the region.
“Based on strong numbers we have seen in relationship to travel throughout 2022, it seems that we have a reason to be optimistic about travel in 2023,” Belarmino said. “However, with the exciting sporting events we will be hosting next year (Pro-Bowl, Sweet 16 and Formula 1), I anticipate that Las Vegas will come out strong next year even if we see consumers begin to cut back on their travel.”
McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at email@example.com. Follow @mckenna_ross on Twitter.