Thursday, February 12

Blacklisting Vegas: President Obama


According to the Las Vegas Convention and Visitors Authority (LVCVA), Las Vegas hosted 22,454 conventions and meetings that attracted more 6 million business people and conventioneers in 2008. It accounted for an economic impact of $8.5 billion, employed more than 46,000 Southern Nevadans (75,000 with indirect employment), and represents close to 15 percent of the city's total visitor volume.

On Monday, President Obama said he wanted to end that.

“We’re going to do something to strengthen the banking system. You are not going to be able to give out these big bonuses until you pay taxpayers back. You can't get corporate jets. You can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayers' dime. There's got to be some accountability and some responsibility.” — President Obama, Town Hall discussion in Elkhart, Indiana

There does have to be accountability and responsibility.

"Mr. President, I understand the enormous burden you carry in dealing with the worst economy since the Great Depression. I also understand the need for accountability, but your comments are harmful to the meetings and convention industry as a whole and Las Vegas specifically." — Mayor Oscar Goodman, Las Vegas, Letter posted at Las Vegas Now

Careless research and ill-advised words damage lives.

According to the Las Vegas Review-Journal, President Obama based his decision on a report that cited "$300 hotel rooms" as an example of extravagance. The Venetian, which is a more upscale property, lists rooms for $189 per night. The LVCVA reports the average room rate was $119.19 in 2008, with a low of $96.39 in December.

Specifically, businesses attend conventions and meetings in Las Vegas because of its room rate discounts, reasonable air fare, diversity of offerings, and the strong local infrastructure to support it. Since 2000, the city has gone to great lengths to carry a dual message that, despite its party town image, it is an extremely smart and cost-effective choice for business.

At least four major companies have already canceled their plans to meet or hold conventions in Las Vegas this year. Some of the cancellations have to do with the perception of Las Vegas, while others might be because of their own financial constraints. State Farm planned to book 11,000 rooms in September, but those rooms will now remain vacant. Wells Fargo, which received some bailout money, also backed out of a 12-day junket in response to cries that the meeting represents wasteful spending.

Unless replaced, the damage caused by these lost bookings could be severe to a local economy already experiencing a 9.1 percent unemployment rate, well ahead of the national average. It is anticipated to hit double digits this year, with the state facing a economic crisis, which began after it was hit especially hard by the subprime mortgage situation.

The campaigning needs to end and bailouts too.

During campaigns, politicians are sometimes quick to call out and vilify opponents, industries, and government. The message becomes simple. Everything is bad, and we need to change it all. While I'm not a fan of peddling fear, many campaign managers understand all too well that these trumped up rally cries can move certain publics to the polls.

However, once elected, most politicians are seasoned enough to understand that the communication needs to shift in order to govern. As elected officials, most know that effective leadership requires the polarization to stop and productivity to begin. They recognize that they no longer represent campaign slogans but rather the Wall Street stock broker in New York and the maid in Las Vegas and the automotive lineman in Detroit. They are no longer entitled to pick and choose which American people they represent. They represent us all.

Regardless of how you feel about Las Vegas, President Obama's message did not communicate anything about this city as much as it communicated something about the recent waves of bailouts and the stimulus package in general. The power of the purse is the ability of one group to manipulate and control the actions of another group by withholding funding, or putting stipulations on the use of funds. This power grab is alive and well in America.

After Monday, it now seems all to clear that President Obama is intending to use this power and perhaps abuse it, under the guise of protecting taxpayer money. However, in delivering this message, he neglects the obvious. The 46,000 Americans directly employed by the convention industry in Las Vegas are taxpayers too. They are owed an apology.

Good night and good luck.

10 comments:

Anonymous said...

I support the president when he supports us!

Barry on 2/12/09, 7:51 PM said...

Well said Rich.

It is world of resounding words. They are amplified and broadcast and repeated and often they are chosen to illicit effect at the expense of reality.

Why these words are chosen and why they have various effects is a deeper discussion but I suspect it has something to do with a society that tends to be on the lookout for the "bad guy".

Rich on 2/13/09, 8:07 PM said...

@Barry

You're right. We need to change the communication.

Except for those who knowingly place public safety at risk or defraud people, there is no "bad guy." You helped inspire my post for Friday. I think our focus on finding someone "responsible" has diminished our ability to think. As a whole, there is too much fear.

All my best,
Rich

Rich on 2/13/09, 9:52 PM said...

@Anon

It's not so much the President as what he is saying. There is no need to campaign against everyone anymore. It creates fear. It immobilizes the country.

Think about it.

Best,
Rich

Anonymous said...

Vikram Pandit, CEO, Citigroup. The government has already invested $45 billion in your bank, and it still doesn’t seem close to stable. Your stock is down 85 percent from a year ago, to less than $4. Investors obviously expect a lot more bad news. What is the total amount of federal aid you think Citigroup will ultimately need to regain its footing? If it turns out you’re lowballing by more than 10 percent, we’d like all of our money back.

[See 15 companies that might not survive 2009.]

Ken Lewis, CEO, Bank of America. Please stop telling us you did America a favor by buying Merrill Lynch. You’ve coveted an investment bank for years, and you’re supposed to be smart enough to tell if the one you finally end up buying is loaded with time bombs. You’ve been spending your own money to buy up your company’s depressed stock – down 84 percent over the last year – to show how much confidence you have in Bank of America. But why should shareholders – and taxpayers – have confidence in you? Hasn’t your judgment been pretty shaky?

Jamie Dimon, CEO, JPMorganChase. You’ve emerged as one of the “good bankers” whose firm appears to have avoided the worst excesses of greed and bad judgment. We also appreciate the wry humility you’ve shown by proclaiming that at JPMorgan, “we suck less.” Pretty funny. So maybe you can answer this conundrum: How are banks – which got into trouble by gambling too much money on risky loans and securities – supposed to solve the “credit crunch” by lending even MORE money to businesses and individuals that are now more likely than ever to default on their loans?

[See what Miracle-on-the-Hudson pilot Sully Sullenberger can teach CEOs.]

Lloyd Blankfein, CEO, Goldman Sachs. Your firm has received $10 billion in government bailout funds. Why do you need it? Goldman lost money in the most recent quarter, but still earned $2.3 billion overall in 2008. One money-losing quarter, and you need the feds to come to the rescue? Shouldn’t the barons of capitalism be able to nurse their own losses?

John Mack, CEO, Morgan Stanley. You too. $10 billion from the Treasury. A loss in the fourth quarter, but a net profit in 2008 of $1.7 billion. In your 2008 earnings release, you bragged about how Morgan Stanley strengthened its capital position in 2008, and earned record revenues from fixed incomes sales and equities and derivatives trading. Sounds like you’re doing okay. So when do you plan to pay back the $10 billion?

[Read some tips for how to skirt taxes, while still landing a plum job.]

John Stumpf, CEO, Wells Fargo. We’re all wondering if your bank is about to go down the drain, like Citigroup and Bank of America, or if you really did manage to steer around the huge sinkhole that’s swallowing everybody who funded the phony U.S. housing boom. If anybody knows, it’s you. So is Wells Fargo in the clear? Or are you sitting on yet another banking debacle? If Wells Fargo is healthy, wouldn’t you prefer to return that $25 billion in taxpayer money, so you can party in Vegas without getting lectured by Washington? Besides, we could use the money back - we’ve got other problems that are costing a bit more than expected.

Stanley O’Neal former CEO, Merrill Lynch. (Not scheduled to testify.) Stan the man! Come on down! To Washington, DC, that is! We realize you’re not running Merrill anymore and you’re not scheduled to testify, but let’s get together and reminisce about old times. Like those heady days in 2005 and 2006, when you oversaw deals that eventually saddled Merrill with more than $40 billion in losses, leaving the firm on the brink of collapse in 2008. We could also chat about that $160 million payout you got when you left Merrill in 2007. That might have seemed like reward for a job well done. Turns out the job wasn’t quite done after all. Let’s talk about that. Over a fancy lunch. You're buying.

[See how Wall Street continues to doom itself.]

Charles Prince, former CEO, Citigroup. (Not scheduled to testify.) We need some dancing lessons, Chuck. In 2007, you justified Citigroup’s financing of dozens of go-go deals by pointing out that all of your competitors were doing it, too: “As long as the music is playing, you’ve got to get up and dance,” you told the Financial Times. Did you expect the music to keep playing forever? Well, it didn’t. Since you left Citigroup in 2007, the bank has lost nearly $20 billion and almost cratered, on account of deals you oversaw. Yet you earned a $105 million exit payment, on top of $53 million from your four years as CEO. Maybe you're still in a dancing mood, but we're not. So please, tell us why wrecking one of the world's biggest banks is a feat worth millions. We're all ears.

Would you define these fellows as bad guys?
Or just confused guys?
I fear men like these. I fear their collegues. Your city will be better off without them.

Is $300 per night NOT extravagant? It is for me.

We may be heading into an age when American values shift a good deal. Some would argue that our culture has been sick for a long time. Some things grow in times of sickness. Some things shrink as we heal. Sometimes medicine is hard to swallow.

I am thinking and I am fighting for a better country.

Anonymous said...

So sorry. I did not understand that you were correcting Obama's mistake, quoting Vegas rooms at $300 per night. Yes, I too think that he should apologize for bad Vegas room rate information.
All of us regular folks who's houses are being taken away by the banks need some of those better rates.

Rich on 2/16/09, 11:31 PM said...

Anon,

I appreciate the passion. I also appreciate that one of the companies moved their group to San Francisco to avoid the stigma of Las Vegas.

The outcome: they spent DOUBLE.

So in winning any perceived victory of having businesses not hold meetings in Las Vegas will cost twice as much. Like it or not, businesses still have to meet. Vegas is competitive.

There is no sense killing this market, which already suffers one of the highest unemployment rates in the nation. I doubt it very much that you would appreciate it if your city was blacklisted too.

As for me, personally, I was against the bailouts.

However, it might be worthwhile for you study some of the economic regulations and political prodding of banks to give loans to people who could not afford them over the last few years. It started with the Clinton administration.

Or, you can be like me and realize that this country will not get better playing the blame game so it just doesn't matter. Besides, if we are being honest, everyone is to blame.

We need to more forward. And we need to move forward without blame or fear. And that comes from a regular guy with a mortgage in one of the worst housing markets in the nation. Fixed rates, thank goodness.

Or, more to my point, why would you want to see more people unemployed and losing their houses?

All my best,
Rich

Balceroregontr on 2/17/09, 11:09 AM said...

Your columns are always full of insight. I believe the blame game just traps us in the same place we started. Knee jerk reactions don't accomplish anything. It is easy for politicians to find a grain of truth to support the agenda they want to push. We, as taxpayers, need to realize that the best solution is often not the quickest solution. We need to educate ourselves about the choices we make and hold our politicians accountable. Chicago is a very expensive city to travel to for business. Las Vegas has cheaper rooms and more affordable air fares and less problems at the airport. I hope our President learns he now is the leader of our nation and not a senator for Illinois and needs to look at the national picture not the regional one.

Dream Team on 2/18/09, 3:19 PM said...

I agree with your take on the fear factor rising in the US. I thought Obama's message was of hope and change. It has turned into manipulation of fear for the purpose of enforcing his agenda under the guise of URGENT Necessity!

Like the book recommendation. I will add it to my list to read. Have you also read, "WHo Moved My Cheese?"
~In the spirit of success,
Travis Flaherty

~Check out my blog
~

Rich on 2/18/09, 7:52 PM said...

@Balceroregontr

Well put. The campaign is over. We need leadership.

@Travis

If you liked Who Moved The Cheese, then you will absolutely like my very next post.

It begins ...

"What Would You Do If You Weren't Afraid?" — Haw

Best,
Rich

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