Authority needs room tax revenue
To the editor:
Your Wednesday editorial on the transportation issue being debated at the Nevada Legislature omitted a significant amount of information and misled readers. The reference to the visitor-paid room tax as a “pot of gold … ripe for a raid” is rhetoric that misrepresents the facts. In fact, the visitor-paid room tax is a direct investment in the future livelihood of every resident of the Las Vegas Valley.
The Las Vegas Convention and Visitors Authority recognizes that transportation is an issue that needs to be addressed. Tourists certainly contribute to a portion of the traffic congestion. However, it is disingenuous to assert that only tourists create traffic congestion at the Spaghetti Bowl, the Rainbow Curve, U.S. Highway 95 and Lake Mead Parkway in Henderson.
What many residents may not know, and the Wednesday editorial failed to mention, is that visitors already pay for a share of our road construction costs under current tax laws. Tourists pay nearly 100 percent of all room tax revenues and one-third of all sales tax revenues in Nevada. In fact, our visitors pay for roads, parks, schools and other local government services.
Under the current room-tax distribution formula, 53 cents of every dollar is reinvested in our communities. Over the years, the visitor-paid room tax has generated more than $1.6 billion to improve the quality of life of all Southern Nevada residents. Over the next 20 years, visitors and convention delegates will generate more than $1.7 billion in room tax revenues for county transportation projects alone.
The tourism industry needs to continue to pay its share for infrastructure. However, your editorial reference — and accompanying insinuation — that tourists and resort employees are the main cause of traffic is just rhetoric. At some point, we must acknowledge that 1.9 million residents use our roads.
More importantly, each one of us needs to recognize what made Las Vegas what it is today. We are a community that is defined by the gaming and tourism industry. It is the economic engine for our community and the entire state. Our business model has worked well. Las Vegas hosted a record 38.9 million visitors for an economic impact of $39.4 billion in 2006.
We have all benefited from the industry, directly or indirectly. The tourism industry has allowed us to flourish. It has allowed us to grow. It has allowed Las Vegas to evolve and local business to thrive.
The efforts of the LVCVA are responsible for helping Las Vegas emerge as a world-class destination. We use our portion of the visitor-paid room tax to sell Las Vegas. The LVCVA’s budget is larger than other destinations because our tourism industry is larger than every other destination. The LVCVA is one of the few organizations in the world that has the responsibility for marketing the overall destination while also operating two convention centers, the Las Vegas Convention Center and Cashman Center.
We have started an $890 million renovation of the Las Vegas Convention Center. The program will expand the convention center by nearly 600,000 square feet. The renovation will involve nearly every square foot of the existing 3.2 million-square-foot campus with such projects as new meeting rooms, replacing electrical and fire-prevention systems, enhancing security and installing new technology.
Various segments of the convention center were built nearly 50 years ago. Upgrading and expanding the facility to better serve our customers is critical if Las Vegas is to remain the No. 1 trade show destination in North America. Orlando recently completed a renovation of its convention facility, and New York, Chicago and Phoenix are also renovating their convention centers. We directly compete for convention business with these destinations.
Every Las Vegas hotel benefits from our marketing efforts. Hotel occupancy rates reached 90 percent in 2006, more than 25 points above the national average.
That doesn’t happen by accident. It happens as a result of concerted efforts to market our destination and facilities.
Approximately 35,000 hotel rooms are scheduled for construction over the next five years. Las Vegas must attract 20 million additional visitors over the next four years to maintain our hotel occupancy rate of 90 percent. If new rooms are built but no new visitors come, there is no new revenue.
In the face of increasing competition from Orlando, Chicago, New York, California and Colorado, along with other destinations, the LVCVA must receive additional room tax dollars to remain competitive. We must aggressively market the destination to attract new domestic and international visitors. We will use future room tax revenue to grow special events such as the National Finals Rodeo, U.S. Olympic basketball, the Vegas Grand Prix and World Cup Equestrian Events; finance the renovation at the Las Vegas Convention Center; attract new conventions to Las Vegas; and, in partnership with McCarran International Airport officials, establish new flight service. (Virgin Atlantic’s direct flights from London and Korean Airlines’ direct flights from Seoul are examples of such efforts.) All of these initiatives increase visitation, which directly benefits Southern Nevada residents and keeps our business economy strong.
Assuming that visitation will continue to increase by maintaining the status quo is a billion-dollar gamble for this community. When the tourism industry suffers, by artificial or natural market conditions, we all feel an immediate economic impact.
As the transportation issue is debated, we would encourage a sound business approach. We are willing to be part of the solution. We encourage the Legislature and all parties to exercise good judgment in developing a reasonable solution to our complex transportation issues.
OSCAR B. GOODMAN
KEITH SMITH
LAS VEGAS
Oscar B. Goodman is the mayor of Las Vegas and chairman of the Las Vegas Convention and Visitors Authority Board of Directors. Keith Smith is president and chief operating officer of Boyd Gaming and vice chairman of the visitors authority board.
