Economy Redraws LVCC's Redesign

LAS VEGAS—Citing a challenging economic climate, Las Vegas Convention & Visitors Authority officials decided to restructure the pace of their $890 million Las Vegas Convention Center enhancement plan.

LVCVA spokesman Jeremy Handel said a thorough review of the economy was the catalyst for the decision to revamp and split the plan into phases rather than have the project move at one continuous pace.

Although one might predict some surprised or even disgruntled reactions from its many tradeshow tenants, for some show managers, the revised redesign plan was music to their ears.

“Given the political and economic challenges the LVCVA has faced on this project, I think it's a logical step,” said Chris Brown, executive vice president of convention and business operations of the Natl. Assn. of Broadcasters, which holds The NAB Show at the LVCC.

The revised schedule reverses the original order of the project and will begin with renovations of the existing building, with new additions and cosmetic improvements to take place at a later date.

“We determined that it is in our best interests to approach the project this way after reviewing the current economic conditions,” Handel said.

According to the LVCVA's most recent Executive Summary Report, gaming revenue saw a year-to-date decline of 5.1 percent. Even though average room rates were down 6.2 percent, hotel occupancy was down 2 percent to 89.3 percent. Add in lower visitor spending and the high cost of oil – approximately $114 a barrel at press time – and it's a recipe for more cautious business decisions.

But Handel stressed about the change in construction plans, “This is not a postponement; ... we've simply changed the schedule of how we're doing things.”

The first phase will begin in the first quarter of 2009, cost $395 million and take two years to complete, Handel said. It will include renovating existing meeting rooms and public spaces of the North and Central halls, adding restrooms and refurbishing the grand concourse and restaurants, as well as construction of the Las Vegas Metropolitan Police Substation and the Clark County Fire Station, he added.

At this time, relocation of the building's utilities is underway, with the police station nearing completion, Handel said.

During the second phase, meeting rooms will be added to the South Hall, and it will be renovated, he added. Depending on the economy, Handel said, this phase could either begin immediately after the first phase or be postponed until financial conditions improve.

The third and final phase includes some of the more visible and expensive improvements to the center, such as a facade upgrade, construction of a new grand concourse and lobby connecting all three halls and upgrades in front of the facility to Silver Lots one and two that include a transportation hub and pedestrian plaza, Handel said.

Whether this phase follows on the heels of the second phase or starts at a later date also is contingent on economic conditions, he added.

Breaking up the project rather than putting it on hold is good news for the 49-year-old LVCC. According to LVCVA officials, going forward with the redesign is necessary if the facility is to remain competitive and keep pace with technological developments and other industry trends.

So, what do some of LVCC's biggest tenants think of this new strategy?

According to Handel, the feedback has been supportive: “Our clients are very understanding of the situation and supportive of the project and our approach,” he added. “Client communication has been a critical part of the (Master Plan Enhancement Program) from the beginning.”

According to several show managers, including Brown, the LVCVA's decision makes sense.

As the monster tenant of the LVCC, and one that uses more than 1.8 million net square feet of facility space, it would seem that Intl. CES would be most affected by the shift in plans.

Karen Chupka, senior vice president of events and conferences for Consumer Electronics Assn., which owns the show, said she doesn't see the restructuring as a delay, but a reprioritization of the project.

“It makes sense to us that (they have) made the renovation of the current building the priority,” Chupka said. “We support the LVCVA in its decision.”

She explained that the original timeline was a problem for CES, because the lobby and front of the building would have been under major construction for two years. As a full-facility user, Chupka added, this meant that CES's parking lot exhibits and most visible banner space, about $3 million in inventory, would have been eliminated for that period of time.

World of Concrete Show Manager and Director of Hanley Wood Exhibitions Tom Cindric also was positive about the new construction schedule.

“We are pleased that the LVCC will be moving forward first with the areas that are in need of the most updating,” Cindric said. “The delay is actually a positive for us since it gives us access to the parking lots we need for our outdoor exhibits and events.”

Brown said he also understands the feasibility of this new plan.

“I'm glad to see that they are moving forward and have laid out a plan that seems to be practical and remains true to the original vision,” he added.

Brown said NAB prepared for the construction, but what mattered most was having a greater degree of certainty around the near-term plans.

Although Brown said he's pleased there will be less disruption for the 2009 event, he remains excited about the end result of the project.

So, how will the LVCVA know whether it's time to move forward with its construction phases or take a breather?

According to Handel, the same factors that influenced the decision to tread more carefully also will influence whether to forge ahead.

“We will be moving forward ... as long as we are able to do so in a fiscally responsible manner,” he said.

Despite the economy and all its challenges, what matters at the end of the day, according to LVCVA officials, is that the LVCVA formulated a strategy to help it meet the original objective – an upgraded, state-of-the-art and still-very-much-in-demand convention center.