MINUTES OF THE ASSEMBLY COMMITTEE ON ECONOMIC DEVELOPMENT AND TOURISM Sixty-eighth Session March 22, 1995 The Committee on Economic Development and Tourism was called to order at 5:30 p.m., on Wednesday, March 22, 1995, Chairman Dianne Steel presiding in Room 321 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mrs. Dianne Steel, Chairman Mrs. Maureen E. Brower, Vice Chairman Mr. Mark Manendo, Vice Chairman Mr. Jack D. Close Mr. David Goldwater Mrs. Gene Wines Segerblom COMMITTEE MEMBERS EXCUSED: Mr. Michael A. (Mike) Schneider, Chairman Mr. Thomas Batten GUEST LEGISLATORS PRESENT: None STAFF MEMBERS PRESENT: Donald O. Williams, Chief Principal Research Analyst OTHERS PRESENT: None Lieutenant Governor Lonnie Hammargren, M.D., Chairman, Commission on Tourism and Commission on Economic Development introduced himself to the committee. He expressed the pleasure he is having fulfilling the duties of his job as chairman of both commissions and briefed the committee on recent speaking engagements within the state. He shared trends and recent statistics pertaining to the state: Nevada has the highest tourism income and the lowest percentage of poverty within the western United States; and Nevada has the highest number of medically uninsured people in the United States. He reported Nevada's reliance on tourism has increased in the fourteen years of having a Commission on Economic Development, however, efforts must be made to escalate economic diversification to serve as a cushion when tourism starts to level off. He remarked he would most likely ask for a bill draft during the next legislative session to adopt a state quality standard for economic development. He reported it would be modeled after Utah's plan that has developed standards in relation to wages, tax rebates and incentives. He cautioned the state must be careful to solicit the right kind of businesses to move to Nevada. Dr. Hammargren's ideas to sell Nevada included filming a large format, Omnimax-type promotional movie on Nevada to be distributed internationally and developing a world-wide network for tourism and economic development through international hotel chains based in Nevada. Chairman Steel asked Dr. Hammargren to elaborate on the possible merging of the two commissions. Dr. Hammargren stated he supported the idea, however, did not want to see Economic Development lost in the shadow of Tourism. Mr.Thomas Tait, Executive Director of the Nevada Commission on Tourism, introduced his professional staff to the committee. He proceeded to give an overview of the commission's history and listed their original goals developed in 1983: to promote rural tourism; to provide a hedge against competition; to offer a composite view of the state in consumer trade marketing; and to promote the state's cultural, scenic, recreation and historic attractions. Mr. Tait explained the original commission was concerned that gaming was likely to proliferate nationwide, the state's tourism economy needed to be more diverse and recognized the public was becoming more discriminating in their choice of vacations. Customers did not want just a gaming/entertainment experience that came with the hotel/casinos. Mr. Tait identified the original commission's list of needs: to promote the state's recreational, cultural, historic and scenic resources; to tell travelers the complete Nevada story; to establish a statewide clearinghouse for the dissemination of information about the total Nevada product; and to develop a process for rural communities to partake in grant funding for programs, events and collateral material. Mr. Tait explained the marketing division deals with consumers and the trade. He distributed recent advertisements created specifically to showcase the cultural, scenic, historic and recreational attractions of Nevada. He indicated the consumer advertisements would generate 414,000 phone calls and letters into their telemarketing operation this fiscal year. Of the 414,000, approximately 55% are destined to come to the state regardless and are searching for a composite view of available activities. The net conversion rate equates to the number of people (new customers) who saw the ad, called the number, received information in a timely manner from the commission and then chose to come to the state. He indicated scientific research predicted new customers to total 18%. Non-gaming expenditures for families who visited the state were $710 per visit; gaming expenditures were $693. He added the numbers are verified through scientific sources as part of the conversion study they perform annually. Mr. Tait explained the scope of the commission's involvement with trade publications. He said the majority of trade contacts are in the United States and western Canada. The commission's fulfillment program was outlined by Mr. Tait. He said typical information mailed included a visitor's guide, the state map, Nevada Events and a Discover Nevada Bonus Book. Mr. Tait displayed the Nevada Sales Guide produced by R&R Advertising, a promotional piece for children, and a series of territorial brochures. He said a new video being produced will replace a 7-year old piece and is scheduled for release within the next few weeks. It will be available to consumers through their eight hundred number at cost and will be free to the trade. Mr. Tait discussed the responsibilities of the commission's Tour and Travel Management Division which handles domestic and international trade shows as well as the coordination of their two international offices they share with the Las Vegas and Visitors Authority. The trade offices are in London and Tokyo and deal with tour wholesalers, tour operators, and airline personnel - people who want to book large groups of people into the state. He indicated 22 trade shows were scheduled, 8 of which were international. The division is focusing attention on Germany, South America, Japan, Hong Kong, the United Kingdom, South Korea, Taiwan and to a lesser degree, Europe. Mr. Tait described the responsibilities of their Division of Media and Press Relations and Public Relations. They provide a library of resources available for any press person anywhere in the world in an 8-hour time span. The service has resulted in over $12.5 million in free editorial press for the state. Mr. Tait reported they provide a multi-faceted educational agenda which is in two principal parts: the Governor's Conference on Travel and Tourism with an attendance of over 700 tourism and travel managers and the Rural Tourism Roundup with an attendance of over 200 rural tourism professionals. He indicated the "Discover the Facts" bulletin, mandated by the legislature, is published quarterly and updates the state's economic and infrastructure trends. Government affair services dealing specifically with travel and tourism issues were also outlined by Mr. Tait. He stated they want to protect the rights of the airlines and helicopter services that fly tourists into the Grand Canyon, keeping their restrictions to a minimum. He added they want to provide access to the Great Basin National Park as it is considered to be an underutilized state park by federal standards and its funding sources may be transferred to Bryce or Zion National Parks. The division is confronting the Department of the Interior and certain members of Congress in order to maintain their present funding level. Mr. Tait stated they also deal with all infrastructure issues in order to ease capacity problems and move people quickly into and out of tourism and recreation areas. Mr. Tait yielded to Rich Moreno, publisher of Nevada Magazine for the past two years. He stated he has the best job in the world. He distributed a packet which he hoped would give the committee an overview of their products (Exhibit C). Mr. Moreno stated the magazine's sixtieth anniversary in January 1996 will be marked by a special commemorative issue. He reported 75% of their subscribers live outside of Nevada. The magazine is a tool used to educate people about Nevada in terms of its history, culture, attractions, and recreational activities. Chairman Steel inquired whether the magazine was self- supporting. Mr. Moreno responded they were. Mr. Moreno reviewed products offered by their retail mail order operation. He displayed their limited edition collection of back issues, incentives (ghost town map and cookbook) to draw in new subscribers and new Nevada Magazine index. Mr. Moreno reported on their plans to move into the former state library in Carson City. The magazine's goal is to open a retail store within the building by Nevada Day; occupancy of the building is slated for August. Referring to their association with Reno Air, Mr. Moreno said they formerly were the in-flight magazine for the airline. The airline later changed over to their own in-flight publication and due to advertising conflicts they could no longer put Nevada Magazine in their seatbacks. He reported a deal has recently been finalized which will entail making the magazine available to fliers as they enter all Reno Air jetways. Mr. Tait discussed the Rural Program Division which distributes grants totaling $500,000 to rural recipients. Funded events include Cowboy Poetry, Shakespeare at Sand Harbor, and Festival in the Pines. Mr. Larry Friedman, the division's director, is also in charge of producing the Rural Roundup and overseeing the Scenic Highways Program. The Las Vegas strip is soon to be designated the first nighttime scenic byway in America. In conclusion, Mr. Tait indicated the commission's funding source is three-eights of one per cent of the room tax. He added the commission does not rely on state funds, their only revenue sources are registration fees at conferences and any materials they sell. Ms. Karen Baggett, Deputy Director, Commission on Economic Development, stated their Executive Director, Tim Carlson was unable to attend the meeting due to airline delays. She distributed their biennial report (Exhibit D) and referring to page 6, familiarized the committee with the commission's members. She stated the commission is focused on attracting primary business development to Nevada from outside the state and encouraging primary business expansion within the state. To accomplish this task, the commission organizes and operates a variety of programs designed to promote a more diversified and prosperous state economy. Ms. Baggett explained how their regional development authorities operated and the objectives of their grants/awards programs. Referring to their Rural Program on page 10, Mrs. Baggett reported their objectives are to provide technical assistance to rural communities through the rural development authorities, informational/training conferences and the Silver Star Communities Program. She explained community development block grants help rural areas by improving both the living conditions and economic opportunities primarily for low and moderate income persons. Mrs. Baggett summarized their Database and Client Services Program, International Program, Procurement Outreach Program and Office of Small Business. She stated their Motion Picture Division is involved with the promotion and support of Nevada locales for motion pictures, television series, commercials and video productions. Nevada is the fourth ranking location in the United States as far as filming locations are concerned. The objective of their marketing program is to attract successful, well-financed companies offering above-average job opportunities to the state. They have built and maintained a national image for the state as a progressive, business-oriented state. Ms. Baggett noted they have begun target marketing in order to improve the quality of their leads. Mrs. Baggett described the commission's various economic development programs and turned the committee's attention to the pages listing new firms that have moved to Nevada during fiscal years 1993 and 1994. Chairman Steel requested more information on QBC. Ms. Baggett said their Las Vegas staff member, Helen Meyers, has been working with QBC since November 1994. They are doing a 50 state specialty about each state highlighting products made within the state. Assemblyman Goldwater asked Mrs. Baggett to give her opinion on the proposed merger between the Commission on Economic Development and the Commission on Tourism. Mrs. Baggett stated change can be good and as long as economic development and tourism can be assured their same programs will continue, she felt it was a step in the right direction. Assemblyman Close asked Mr. Tait to state his opinion regarding the merger. Although not a strong supporter upon introduction of the idea, Mr. Tait said he has since changed his mind. Mr. Tait said combining many of the programs in order to appeal to trade and tourism was an exciting challenge and the possibilities were limitless. He maintained he was presently one of the mergers strongest supporters. Mr. Tait did not envision any programmatic changes to take place, however, wrestling with the funding combination poses an interesting challenge. The meeting adjourned at 6:20 p.m. RESPECTFULLY SUBMITTED: Janine Sprout, Committee Secretary APPROVED BY: ____________________________________________ Assemblyman Michael A. Schneider, Chairman ____________________________________________ Assemblyman Dianne Steel, Chairman Assembly Committee on Economic Development and Tourism March 22, 1995 Page