LAS VEGAS-The Las Vegas Convention Center over the next few years will undergo an $890-million renovation and expansion. The plan includes a substantial overhaul and an expansion to 3.8 million sf from 3.2 million sf. Work on the enhancement project will begin in earnest in 2008, with the major work being complete in 2010.
Improvements include a naturally lit lobby, a completely renovated exterior and a more modern interior design. The additions include a 37% increase in meeting space, a 78% increase in restaurant space and 67% more food-service space. The convention center also will gain a Las Vegas Metropolitan Police Substation and a Clark County Fire Station, a first for such a facility.
The upgrades are meant to maintain this market’s position as the top destination in America for trade shows and conventions, such as the annual International Council of Shopping Centers event that will attract nearly 50,000 people to the market early next week for a four-day stay. Trade Shows and conventions annually contribute $8.2 billion to the local economy, according to the Las Vegas Convention and Visitors Authority, whose board of directors, which includes executives of Strip casino-resort operators, recently approved the massive makeover.
As with most construction projects as of late, the cost of the Las Vegas Convention Center project has risen significantly since it was first conceived. The most recent cost estimate is $153 million (21%) more than the previous estimate of $737 million. The increases were due to rising materials costs and the addition of new project components recommended by users.
The LVCVA plans to finance $822 million in debt securities for the project and use cash for the remaining $68 million. The financing could be interesting if a just-announced plan by Gov. Jim Gibbons can fly through the state legislature, which is only one month from checking out. His plan is to use future increases in revenue from hotel room taxes to finance a portion of the state’s $3.8-billion shortfall in highway construction funds.
With the tens of thousands of new hotel rooms expected to come online in the coming years, it could be a substantial benefit to the region’s transportation programs. On the other hand, that growth is part of what the LVCVA plans to use to pay off the debt taken out to finance the convention center enhancement project. Redistributing the room taxes would “negatively impact our entire Southern Nevada economy,” states a resolution approved by the LVCVA’s board of directors.
The Las Vegas area hosts the vast majority of major trade shows in the US. Not including gambling losses, attendees to those events spent $8 billion in 2006, with the average attendee spending twice as much as a regular tourist, according to the LVCVA.
Jeremy Aguero, principal analyst at Applied Analysis, a Las Vegas-based research and advisory firm, presented a market impact report to the LVCVA board before its vote on the convention center project. The data suggests that the spread between the increase in trade show attendees the renovation would generate and the decrease that would occur without it totals nearly 9 million over the next 30 years, which translates into approximately $5 billion in lost revenue.
“What’s not included in that figure is just as important as what’s included,” says Aguero, explaining that keeping trade show guests happy will be key to hotels here maintaining their plus-90% occupancies as some 47,000 new hotel rooms are added to the existing stock of 133,000 over the next four years. “What’s not included is the potential threat to the brand position of Las Vegas with regard to conventions and trade shows if people start to have negative experiences. Nobody knows what that would be.”