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COVER STORY PUMP UP THE VOLUME Aſt er hit ing a 2007 high of 39.2 million, visitor volume slipped 7 percent to 36.35 million in 2009 , before climbing back to 37.3 million in 2010. new consciousness that has seeped into our brains. Although no one would compare this recession to the Great Depression, it’s worth reminding ourselves of the indelible mark the decade of the 1930s left on the entire culture. It bred an obsession with saving and frugality, values that may have helped build the country, but are— let’s face it—not compatible with the kind of spending or attitude needed to keep Vegas afloat. We’re clearly a long way from that. Still, Baba Shiv, an expert in consumer behavior at Stanford University’s Graduate School of Business, has noticed in his research subtle shifts in consumer psychology. Shiv, who uses psychology, neuroscience (including brain scans) and economics to understand consumers’ idiosyncrasies, says he believes people have rediscovered the long lost pleasure of saving. He cites surveys and other data, including the number of times consumers check their bank balances and 401(k)s. As the recession began, that obsession may have been a sign of anxiety, but now, as saving has increased and the stock market has rallied in the past two years, he hypothesizes that consumers are taking pleasure in watching their wealth grow. Consumers are also more likely to pay in cash or use a debit card now instead of using credit cards, Shiv says. Again, he says, this is another sign that Americans have rediscovered the primal pleasure of saving over borrowing. This raises a key question for Las Vegas: If saving and frugality are now thick in the cultural and economic bloodstream, are we in trouble? “The image of Las Vegas is more consistent with a consumerist mentality,” says Larry Compeau, a professor of consumer behavior at the Clarkson University School of Business in Potsdam, NY. “It’s the freewheeling lifestyle and all the trappings of it, and one of those trappings is going to Vegas and dropping a significant amount of change. But a lot of that has gone by the wayside.” The notion of a budget conscious consumer no longer interested in the Vegas bacchanal sounds | 4 APRIL 2011 | downright frightening. But the trend is more complex, and it actually offers our city opportunity. On behalf of the Las Vegas Convention and Visitors Authority, R&R Partners conducted extensive research, using focus groups and surveys and tagging along with tourists as they spent time here. The conclusion: We’re still in the game, but we need to step it up. R&R found 45 million “persuadable” Americans, or 41 percent of the traveling public. These are people who have a slice of the American dream—a stable job, a home, a family. They have money to spend on a vacation. And, they want value. Ouch. It’s a cringe-inducing word I heard a few times in my interviews around town, and I have to say, it surprised me. When I think value, I think Wal-Mart or Costco, and everyone agrees that’s not what we want to be. priced Cosmopolitan , who says customers will receive a “meaningful and distinctive experience that they value and want to share with others.” Stanford’s Shiv says, “We’re seeing this with high-end retailers, where consumers are willing to splurge, but they want quality.” Kathryn LaTour, a marketing professor at UNLV’s William F. Harrah College of Hotel Administration, says, “If we’re asking people to pay full price, we need to give them a full-price experience.” Vassiliadis suggests these persuadable tourists have become more rigorous, more conscious, less emotional consumers. This new consumer has been shaped by two trends that have walloped the marketplace: The first is the deep recession, which slashed demand, and thus prices, and gave willing consumers considerable leverage. “What’s the next thing? We don’t know the answer yet.” But that’s not quite what we’re talking about here. “That’s the fine line,” says Cathy Tull, the LVCVA’s senior vice president for marketing. “Value isn’t bottom line price. It’s about the experience.” By value, Vassiliadis says, we mean that customers want to feel like they got what was promised, that they can come away from the experience with a tangible sense that it was worth the money spent. “There’s a direct correlation, a more tangible correlation, between what I’m willing to pay for, and what I need to get for it,” Vassiliadis says. Listen closely to the language of Lisa Marchese, senior vice president of brand marketing of high- The second is the emergence of smartphones and other technology that give buyers real-time knowledge of pricing and quality measurements. In Las Vegas, the consumer had still another advantage, a glut of some 16,000 new hotel rooms came on the scene during the recession, pushing down prices still further. In short, consumers have become empowered, and with that empowerment, more demanding. So, how do we attract these people and make them happy enough so they’ll keep coming back? In essence, now what? Let’s boil it down, because it’s not that complicated: 23