September 24 - September 30

Current Issue

Search In Business

In Business on TV

The List

About InBusiness



Nevada looks to China for growth
 
By Richard N. Velotta / Staff Writer

Betting on China
The state of Nevada is leading an effort to develop tourism and commerce with China, including negotiations to develop nonstop air service between Las Vegas and centers of commerce in China. Here are likely population centers from which nonstop flights could be generated. Flight times from Las Vegas would range from 12-14 hours for the cities in northern China to 15-16 hours for cities in southern China.
These Chinese airline are among the leading contenders to develop nonstop flights between China and Las Vegas:
AIRLINE BASE U.S. CITIES SERVED
Air China Beijing Los Angeles, San Francisco, Honolulu, Anchorage, New York
Cathay Pacific Hong Kong Los Angeles, San Francisco, New York
China Airlines Taipei, Taiwan Los Angeles, San Francisco, Honolulu, Anchorage, New York
China Eastern Shanghai Los Angeles
China Southern Guangzhou Los Angeles
EVA Air Taipei, Taiwan Los Angeles, San Francisco, Seattle, New York
Hainan Airlines Haikou None
Shanghai Airlines Shanghai None
Michael Bertrand / In Business Las Vegas

In the 1800s, Horace Greeley encouraged westward expansion for economic opportunity.

Today, nearly two centuries later, Nevadans are looking even farther west -- across the Pacific Ocean -- for that opportunity.

And while the trail west in the 1800s was filled with pitfalls, the movement to achieve a foothold in the state's new tourism frontier -- the People's Republic of China -- will have its own unique twists and turns.

Several government leaders have been working in tandem to open China's doors to let thousands of Chinese tourists in. Several businesses, including the casino industry, also smell opportunity and have begun making their own inroads.

"China is the fastest growing economy in the world," said Lt. Gov. Lorraine Hunt, who has undertaken the expansion to China as one of the primary goals of her office. "There are 1.4 billion people, but more importantly, there are as many as 300 million Chinese who have the means and the money to travel."

Hunt's office puts her in a prime position to be at the forefront of the China marketing effort. As lieutenant governor, she is the chairwoman of both the Nevada Commission on Economic Development and the Nevada Commission on Tourism, both of which have made China a high priority.

Hunt has made trips to Hong Kong, Singapore and Beijing and plans to return to the Far East again in February. While critics frequently question government-sponsored trips as junkets, Hunt has been praised for leading the charge to put the mechanism in place to bring more Chinese to Las Vegas.

"Over 250,000 Chinese people visited the United States last year and 90 percent of them came to Las Vegas," Hunt said. "When I first went to Hong Kong in 1996, before the turnover from the British to the Chinese, I was struck by this dynamic entrepreneurial environment, with people who spoke two or three languages and had two or three jobs, who wore American clothes and loved the American culture.

"My instincts told me that this was not a place that was going to revert to the old China, it was going to a place full of people receptive to coming to Las Vegas," she said.

Later visits, she said, confirmed those theories.

In a trip this year to Beijing, where Hunt presided over the opening of the first American tourism office in the city, specifically dedicated to Nevada, she appeared on television and was told that "only" 900 million people saw the show.

She also spent two hours answering questions in an Internet chat room format.

"I had somebody ask what it feels like to be in Las Vegas," Hunt recalled. "I said, 'Picture yourself among all those neon lights on the Strip at night. Then, you can drive 30 minutes away and look out into the night sky and see millions and millions of stars.' They love those descriptions of the desert, the horseback riding and the dude ranches."

Hunt said Las Vegas is the hook, but there's also a fascination with cowboys. She said the two most popular inquiries she receives when she talks to people in China about Nevada attractions involve Las Vegas and the Ponderosa Ranch, a small attraction near Lake Tahoe.

"They get very excited when I tell them about Virginia City and some of the attractions that are reminders of the Old West," she said.

The fact that American television and dubbed reruns of the old "Bonanza" television series helped create a curiosity among the Chinese about the West works favorably for Hunt. She can satisfy urban and rural tourism leaders by talking about the state's largest draw, Las Vegas, as well as the lure of the state's wide-open spaces.

That tactic takes some of the sting out of the fact that when the state markets itself, it is prohibited by the Chinese government from talking about gambling.

Bruce Bommarito, executive director of the Nevada Commission on Tourism, said that hasn't been a detriment for the state's new Beijing tourism office, which has organized a familiarization trip for Chinese journalists to Nevada next month.

Bommarito said instead, the state office emphasizes Las Vegas' entertainment experience, restaurants, golf and shopping. Most of the people researching visits to the city already know of its casinos so there's no need to boost gaming, he said.

Besides, the casino industry already has a strong link to the Chinese.

Las Vegas Sands Inc., Wynn Resorts Ltd. and MGM Mirage already have begun taking advantage of the vast potential of disposable Chinese income. Earlier this year, Las Vegas Sands, which operates The Venetian, opened the first American-owned casino in Macau, a former Portuguese colony on China's southern coast.

Macau is China's Las Vegas, the only location in the country in which casinos are allowed to proliferate. In the first quarter of operation, Las Vegas Sands said in Security and Exchange Commission filings that its Macau property already is exceeding expectations.

Meanwhile, Wynn Resorts has broken ground on what would be the second American property there and MGM Mirage has negotiated an agreement to partner with an existing Macau operator for a casino. Las Vegas Sands also developing plans for a group of hotels and casinos in a part of Macau known as the Cotai Strip. There, the company plans to build a replica of the The Venetian and develop a similar business model of playing host to conventions, meetings and trade shows.

The Las Vegas operators also are hoping to draw some of its best Macau customers to play in Las Vegas.

While the state and casino industries already have a high-profile head start on tapping the Chinese market, Las Vegas' airport has been moving more quietly on a key component in making the entry to China a success: air service.

McCarran International Airport's manager of air service development, Harry Kassap, who helped steer nonstop service between London and Las Vegas on Virgin Atlantic Airlines and one-stop flights from Manila on Philippines Airlines, has already begun undertaking the challenges of China.

"We're very much in the preliminary stages of our conversations," Kassap said. "But we're anxious to get moving in this marketplace."

Kassap has already made some contacts with Chinese airlines as bilateral talks liberalized flight rules between the United States and China.

At a recent Nevada Commission on Tourism meeting, Hunt said the number of flights permitted between the two nations will expand from 52 a week to 249 a week over the next four years.

While Kassap has identified air carriers that have the fleets and financial wherewithal to fly between China and the United States, Clark County has hired a consultant that has a track record of putting together deals between airlines and cities.

Earlier this month, the Clark County Commission approved a two-year, $360,000 contract with Arlington, Va.-based Garfinkle, Crowell & Wang Associates, known also as GCW Consulting, to develop air service, both passenger flights to and from Las Vegas, and cargo flights to and from Reno.

"We're going to talk with anybody and everybody," said Kassap, who said the process of getting regular service "could take 18 months to several years."

He said his negotiations with Virgin Atlantic and a short-lived effort by Singapore Airlines to fly nonstop between Hong Kong and Las Vegas took several years to develop.

Mo Garfinkle, president and chief executive officer of GCW, said the biggest challenge Las Vegas will have in attracting a Chinese air carriers to offer nonstop flights is to convince them to fly beyond the traditional West Coast gateways.

"We have a gamut of hurdles -- not obstacles -- to clear," Garfinkle said. "The recent bilateral agreements have enabled us to clear a major regulatory hurdle."

The next one is to convince airlines that they don't have to follow the tradition of serving the big coastal cities first.

"We're in the process of putting together our strategy and tactics and the story we want to tell," Garfinkle said. "We have 13 years of experience in China with three offices there and we've worked with every major airline. I have no doubt we will be able to tell a story they'll want to hear."

Garfinkle, who said his company worked to convince British Airways and Lufthansa to serve Phoenix and Southwest Airlines to go to Buffalo, N.Y., said he is confident Las Vegas will land its nonstop flights to and from China.

"I don't believe this is a longshot," he said. "There's a lot of work to do and it's not going to be done tomorrow, but it's a doable feat. Like the Chinese, we have to be patient."

Garfinkle wouldn't identify which airlines he plans to make his pitch to, but other aviation experts say there's a list of companies that are likely candidates. Several already have flights to the U.S. West Coast, making a leap to Las Vegas a possibility:

• Air China. The largest airline serving mainland China, the Beijing-based carrier already serves Los Angeles, San Francisco, New York, Honolulu and Anchorage, Alaska.

• China Eastern. Based in Shanghai on China's east coast, the airline already flies directly to Los Angeles and is a sister company to China Cargo Airlines -- appealing to Northern Nevada, which hopes to become the dominant U.S. point of entry for Chinese exports. Hunt said the Reno-Tahoe International Airport is appealing to the Chinese because fog often closes San Francisco International Airport and the flight time between China and Reno is nearly the same as the route to San Francisco.

• China Southern. The airline is based in Guangzhou, one of the fastest-growing regions in China, near Hong Kong and Macau. The airline has flights to Los Angeles, but it also has an extensive network of domestic flights, meaning more connections across the country.

• Cathay Pacific. Based in Hong Kong, the airline already has flights to Los Angeles, San Francisco and New York.

• China Airlines and EVA Air. The two carriers are based in Taipei, Taiwan, and offer flights to several U.S. destinations. Nevada officials made overtures to those carriers several years ago when they first convinced Japan Airlines to fly directly from Tokyo to Las Vegas.

• Hainan Airlines and Shanghai Airlines. Based in Haikou and Shanghai, respectively, the two carriers may be the least likely to offer flights to Las Vegas, because of their current fleet configurations. Hainan and Shanghai each operate a handful of Boeing 767 jumbo jets that would be capable of trans-Pacific flights, but none of the larger Boeing 747s or fuel-efficient 777s.

Kassap said the most likely destinations in China from Las Vegas are Beijing, China's capital, Shanghai and Guangzhou.

While there are several pitfalls and numerous unknowns to developing tourism relationships with China, most experts concur that it's a risk worth taking since the rewards are so great.

"For most of us, China has been dormant for several decades," said Mike Boyd of the Boyd Group, an aviation consultant based in Evergreen, Colo. "But it's the dominant nation in Asia and it has airlines that are capable of providing the service, and partnerships that would help them.

"It's a natural extension of the kind of international marketing that should be done," Boyd said. "But it's hard to project in a nation like that just how much traffic it can produce. It's probably more than Las Vegas could handle."

While political upheaval is always a risk -- relations between China and Taiwan have always been a source of contention in the U.S. political realm -- cultural matters are also a potential source of worry.

Singapore Airlines only operated its route between Hong Kong and Las Vegas for nine months before bailing out because of low passenger counts. Singapore, one of Asia's most profitable airlines, got into the market a few months before the United States waged war in Iraq and the SARS epidemic was at its worst. Many Chinese, fearing terrorist reprisals, stopped traveling and Chinese health officials curtailed some visits because of the SARS scare.

Singapore Airlines lost hundreds of thousands of dollars in its efforts to market its service and finally discontinued service in April 2003.

But Hunt is convinced China is the place to go next.

"It's such a no-brainer to me," she said. "Northern Nevada can be a major distribution center and Southern Nevada is a great tourism center. Our license to operate a tourism office in Beijing gives us a tremendous advantage. Chinese tourists spend $5,200 a trip -- that's 10 times as much as the average Las Vegas visitor.

"With gaming proliferating nationwide and California tribal gaming squeezing some of our casinos, it's important for us to be first to this exciting new market," she said. "That's why we're being so aggressive and proactive."

Richard N. Velotta covers tourism for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4061 or by e-mail at velotta@lasvegassun.com.

IBLV Homepage

 

Click here for problems or questions. Read our policy on privacy and cookies.
Advertise on Vegas.com. Work for Vegas.com.
All contents © 1998 - 2008 Vegas.com
The Most Visited Place on Earth