Las Vegas transformation comes full circle
19 AUGUST 2015 6:11 AM
Las Vegas has been a city of transformation for decades. Here’s a look at where the city started to where it is today.
Think about some of the world's great destination cities: New York City; Paris; Tokyo; London; Honolulu; Orlando, Florida; Hong Kong. Despite their obvious differences, what they have in common is that for decades each has had its own specific identity. They've been what they've been, and are what they are. And those attributes keep visitors coming back.
Now think about another world-renown destination: Las Vegas, a market that has reinvented itself on more than one occasion, adapting to competition and changing consumer tastes. Maybe this is because Vegas is something of a “manufactured” city, but so too is Orlando and that market has been and remains the center of the theme park universe.
No, Las Vegas occupies a distinct place in the realm of transformation. But now in its eighth decade as a tourist destination, the city has for the most part come full circle, embracing its roots, but with twists that keep it at the top of the list for tourists and conventioneers. It's a case study of some missteps, but ultimately a story of redemption driven by great product and brilliant marketing.
Consider that from 1931 (when casino gambling was legalized in Nevada) through the 1970s, Las Vegas was primarily a collection of one-off hotel-casinos that still evoke nostalgia and a certain romanticism among “those of a certain age”: Sahara, Riviera, Frontier, Stardust, Desert Inn, Hacienda, Dunes. They were run by characters like Bugsy Siegel and Benny Binion, frequented by cooler-than-cool entertainment types like Sinatra, Martin and Davis, and offered cheap rooms and food.
It was all about the casino; if you're my age or older you remember no TVs in the rooms and windowless casinos, all the better to keep players at the tables and slots. The Vegas (and Nevada) unique selling propositions were that there was no other place in the United States to legally gamble and the implied allure of sitting at the blackjack table next to some underworld sharpie.
Along came the 1970s. Organized crime and the “characters” went out, and corporate America came in. The ensuing 20 years saw the one-off hotels become mega-properties run by large, mainly publicly held companies such as Hilton, Harrah's, MGM, Caesars and ITT Sheraton. Where, in 1970, The International (subsequently the Las Vegas Hilton) was Las Vegas' and the world's largest hotel at 1,500 rooms, it was dwarfed in the next 25 years by hotels two and three times that size. The old-timers wept; Las Vegas was becoming “sterile,” and bottom-line oriented.
But one thing hadn't changed: It was still all about the casino. All entertainment, cheap buffets and bargain basement room rates were ultimately in place to draw gamblers, i.e. adults.
A need for more
Sometime in the early 1990s it was determined that simply bringing in slot and craps players wasn't enough. If that was all you wanted to do, so the reasoning went, there were Native American and riverboat casinos popping up like kudzu all over the country. Las Vegas needed to offer, and be, more.
Enter the “family friendly” phase of the city. MGM Grand featured a theme park. Treasure Island had one of the world's largest arcades and a mock pirate ship battle. The Las Vegas Hilton debuted an attraction based on Star Trek. New York New York had a roller coaster wending its way around the property. Now the old-timers really wept. A playground meant for adults had actually become a playground, with moms and dads leading their tiny offspring (or vice versa) to some kid-oriented activity. Of course, while there were now more people coming to Las Vegas, one of the consequences of this approach was that while Mom and Dad were watching little Johnny and Janie ride the log flume at MGM, what they weren't doing was gambling. It was still mostly about the casino, but becoming less so.
The “family destination” aspect of Las Vegas' history was mercifully short. After only a few years, it had run its course and the town reverted to its history as a place run by adults for adults, with elements of the Sin City naughtiness that made Las Vegas what it was originally.
To be sure, the city had to keep attracting more people to compete with the likes of Orlando and the myriad gaming options available throughout the U.S. But the emphasis would now be on attracting more grown-ups, specifically more high-end grown-ups.
Cheap rooms, for years a loss leader to bring in gamblers, were gone; rooms with 4- and 5-star amenities were now a profit center. The $2.99 all-you-can-eat buffet gave way to fine dining, licensed by world-famous celebrity chefs. The old dinner and cocktail shows featuring Borscht Belt comics and lounge acts evolved into Broadway shows and full-length, long-running concert engagements with the likes of Elton John and Celine Dion. High-end designer retailers found a home in Las Vegas. The lobby lounge evolved into hip nightclubs with big time DJs. And all were profit centers.
Make no mistake: The casino is still vitally important. But while gaming as a percentage of total revenue had been declining for some years, in today's Vegas gaming now accounts for less than 50% of total revenue. It's not just about the casino anymore; it's noteworthy that unlike the collection of one-off casinos of yesteryear, or even the fairly large number of corporate operators of 20 years ago, the Strip today is dominated by three New York Stock Exchange companies: MGM Resorts, Wynn and Las Vegas Sands (a fourth company, Caesars, is mired in bankruptcy proceedings) with eyes on revenue diversification.
Adults now had their Disneyland; the best restaurants, luxury hotels, world-class entertainment and culture, haute couture shopping (the “twists” mentioned at the beginning), and casino gaming were all rolled into one. Let Orlando and the Native American and riverboat casinos compete with that!
A great product transformation, naturally, requires an innovative marketing program. And there is none better than the “What Happens in Vegas, Stays in Vegas” campaign. The wink-wink, the naughtiness, the idea that for a few days you could take your life from black-and-white to the Technicolor of Oz was captured perfectly in those seven words.
New York and Paris never had to undergo fundamental changes to attract visitors, never had to “rediscover” their roots in terms of tourism. Las Vegas reconnected with its origins, added great products and promoted it with an ad campaign that has become a pop culture phenomenon.
Elvis would love it.
Marc Grossman is a senior communications executive who served as senior VP, corporate affairs, for Hilton Hotels Corporation, where he was responsible for all global corporate communications, investor/financial relations, public affairs, brand/marketing public relations, crisis communications and internal communications. He also held senior positions with three leading international communications firms. He can be reached at email@example.com.
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