CES leader discusses convention center expansion, high room rates

In this file photo, the lobby of the Las Vegas Convention Center is shown as workers prepare for the 2016 International CES. Gary Shapiro, leader of the organization that puts on CES, said the recent decision by tourism officials to move forward on a proposed $1.4 billion expansion and renovation of the convention center was a welcomed development.

As head of the organization that produces Las Vegas’ largest annual trade show, Gary Shapiro has some insight about convention space in the resort corridor.

Shapiro is president and CEO of the Consumer Technology Association, the organization that puts on CES every year. The technology show brings a huge amount of visitors — and business — to Las Vegas: The most recent version in January drew nearly 177,400 industry professionals.

Yet even with all the convention and tourism-related infrastructure Las Vegas has to offer, CES doesn’t really have room to grow anymore. So Shapiro was glad to hear that tourism officials recently approved a recommendation to fund and oversee the planned $1.4 billion expansion and renovation of the Las Vegas Convention Center.

Gary Shapiro is president and CEO of the Consumer Technology Association, the organization that puts on CES every year.

Gary Shapiro is president and CEO of the Consumer Technology Association, the organization that puts on CES every year.

For him, the news came at a good time: Shapiro was in Las Vegas last week to meet with hotel executives, hoping to advance a constructive dialogue about sky-high room rates during CES. That’s an immediate issue for his show, which returns in January 2017 and stretches into the post-New Year’s weekend. Although CES generally is held mostly on weekdays, this year it's on a Thursday-through-Sunday schedule, so rates will be even higher than usual.

Word that the convention center project has moved forward is more of a long-term blessing for Shapiro. The project stands to open possibilities for organizations like his, which have generally been strong supporters of the Las Vegas Convention and Visitors Authority’s plans.

CES and other trade shows could grow by expanding into the new convention facility that the authority plans to build on the site of the former Riviera hotel, which closed in May 2015 and is undergoing demolition. The additional space could also attract new customers as well.

But it’s not a done deal. In order for the project to fully get off the ground, state legislators must act favorably upon the unanimous recommendation from the Southern Nevada Tourism Infrastructure Committee. Per the committee’s recommendation, the project would be funded in part by a 0.5 percent increase in the county room tax.

The room tax increase would directly affect conventioneers who stay in hotel rooms while they’re in Las Vegas, but it’s a pill Shapiro was willing to swallow. He recently spoke with VEGAS INC about that, among other topics.

Following are excerpts from the conversation. They have been edited for length and clarity.

On the expansion and renovation of the Las Vegas Convention Center

We are pretty much at capacity. We’re almost at 2.5 million net square feet, which is about 4 million gross square feet. Actually, I was tracing the history of this, my own memory: In 2007, the convention authority was really pushing hard for the renovation of the convention center, but it was a three-year project. It would have been very disruptive, especially before a recession. I was pretty strong that they should not go forward on that project, because it would have really hurt our event and other events dramatically. Having an overhaul of an entire convention center over three years would be extraordinarily disruptive. And we needed more space after we got through that recession. So (that led to) the solution, where the convention center can be renovated and there will be a transition plan.

And there’s a lot of other things as part of this plan which are really valuable, when you’re talking about, for example, not just raw exhibit space but up-to-date conference facilities that allow you to do things for exhibitions and conferences that we’ve come to expect around the country. It’s very important to those who produce events that you can have a high-tech look and feel about them. So it meets a lot of concerns and objectives and allows us to grow in a way which makes sense in Las Vegas.

On hotel room rates during CES

High hotel rates are definitely a concern for us. We’re trying to get through the next show, when we’re over a weekend. We’re restricting attendance; we’re doing all sorts of things to try and bring down rates. I spent the last few days in Las Vegas meeting with the leaders of the hotels — the biggest hotels, at least, and some of the smaller ones as well — and we gave them a pretty strong message that we are at an extreme pain point in terms of hotel rates. It is causing tremendous concern, and even resentment, by our own customers. They’re cutting back at this point, because of hotel rates, who’s coming to Las Vegas. We’re trying to come up with creative things: encourage people to room together, average out rates, do all sorts of other things. The rates are really, really high.

On how hotels are responding to those concerns

It varied. There are a couple of hotels that are not very empathetic at all and say, ‘We’ll charge whatever we can charge, and we don’t care what you think.’ And there were hotels which were understanding and they want to work with us. We had all sorts of things we’re still exploring as to how we could reduce the pain, (including) requiring a guaranteed minimum over several days — at least that splits up the average rate in the view of the customer. A number of customers are shipping in people from L.A. every day, or they’re going outside of Las Vegas to resorts that are 20, 30 minutes out. We talked about using Airbnb, bringing in mobile homes. We discussed every possibility to try to allow more people, the people who want to come, (to) come and be able to afford to come.

On “choke points” for growth

The choke point right now is hotel rooms. We were doing well when Las Vegas was adding 10,000 hotel rooms a year. Everyone was winning. And now that there are fewer hotel rooms coming online each year, we’ve reached a point where, last year, we announced that we are restricting attendance to the show. We could go lower, and it’s still an issue for next year. We’re trying to figure out what to do still, so we don’t have too many people.

But it’s not only the hotel rooms — it’s the transportation around Las Vegas. It’s even the number of how many cars can drive in, how many people can fit on airplanes, how many streets there are. And the transportation infrastructure is an issue, which is another reason why being there on a weekend is such a challenge, because you have that weekend crowd that comes in with or without CES.

On transportation in Las Vegas

The light rail proposal, if you can get people to and from their jobs quicker and give them more options, that’s more public transportation. Obviously, that would help. The elevated way of getting to the Strip, yeah, there would be some disruption, but for a long term-gain, and that would help.

What we have seen since I first got involved ... is a very forward-thinking approach by Las Vegas, and a strategic approach to the long term. And what I told the board was, you can’t just stand in place — you have to keep doing it. That’s why we’re thrilled with all these discussions. We’re thrilled with the expansion, we’re thrilled with the focus on transportation and the expansion of the elevated monorail and stopping at different areas. We’re thrilled with the concept of light rail. We even brought to Las Vegas something that others are starting to use now, that’s being used at various airports around the country. We’re using it on the convention centers: It’s a company called Bandwagon, which actually basically gets people in a taxi line going to the same location together.

That’s the kind of thing where there’s no one solution. It’s like many, many different things will help relieve the congestion around a mega-show. But I’ll recognize that we are not the normal show. We are the mega, mega show.

Transportation is one of the choke points. But there’s just not one answer. I’d say there are five or six or seven different things that have to be done and continue to be done.