The news out of Las Vegas these days is grim: Visitor counts are down, casino revenue is falling, and all that despite superlow discount offers by big-name hotels.
But there’s one bright spot. Sales of last-minute discount tickets for spectacles, performances and concerts at the gambling capital’s glitzy towers are flying higher than a Cirque du Soleil acrobat.
And that’s been a boon for Mitch Francis’ Studio City company, Tix Corp. That’s because Tix makes its profits from selling tickets to Vegas shows at 25 to 50 percent less than the face value through its seven retail storefronts that dot the city’s strip or its Web site.
Scott Russell, a Henderson, Nev.-based board member of the Travel and Research Association, said the economy has turned more travelers into last-minute bargain hunters and companies like Tix are reaping the benefits.
“The traditional means of looking at discretionary travel have changed,” Russell said. “People used to purchase travel for vacations 90-plus days out and that’s changed. People are looking to get the same deal three weeks or three days out.”
While the company has also moved into show production in a big way, its profit base still comes from its ticket division.
Tix ticket sales are up despite the Vegas downturn. The city’s visitor count was down 6 percent from January through July compared with the same period last year.
“We’ve been able to buck the trend of Las Vegas,” said Francis, founder and chief executive of Tix. “There has been a decline in the number of people going to Vegas, but those who are coming are seeking value.”
Meanwhile, the company’s expansion into show business – Tix purchased two production companies last year – is boosting revenue, although the live entertainment division isn’t profitable yet.
Tix, which trades on the Nasdaq, reported a 58 percent increase in revenue to $26.6 million for the quarter ended June 30, compared with $16.9 million for the same period last year. The company’s ticketing division reported a 39 percent revenue increase to $4.7 million, compared with $3.4 million for the same period last year. The company’s total net income for the quarter was $659,000, compared with a net loss of $1.2 million for the same quarter last year when Tix acquired the two production companies.
The boom times for Las Vegas lasted from 2002 to 2007. During that period, visitor counts increased by 12 percent, the average room rate increased by 72 percent and gaming revenue increased by 42 percent. Tourists were spending money on the lavish hotel rooms, celebrity-owned restaurants and other entertainment.
In the past, Las Vegas had been somewhat immune to economic weakness. Visitor counts dropped only by 2.3 percent from 2000 to the end of 2001, when the tech bust and post-Sept. 11 travel downturn hit most other cities much harder.
But the downturn that began last year has hit Las Vegas particularly hard. As fewer people are visiting the city, the average room rate has dropped 26 percent through July compared with the same period last year, and gaming revenue is down 13 percent.
Francis, a former commercial real estate developer, started Tix in 1993. At the time, the company operated 3-D movie theaters outfitted with motion simulators. The theaters were spread across the United States and Canada.
Francis had spent a great deal of time in Las Vegas because the company’s flagship simulator was in Caesars Palace. After scoping out the environment, he came up with the idea to sell discount tickets to the shows playing in the city’s casinos and hotels in 2000, and launched the operation two years later.
“I recognized that we were good at ticket selling,” he said, “and that Las Vegas did not have the same-day discount ticket idea that existed in New York for Broadway ticket sales.”
The company gave up on 3-D motion simulation theaters in 2003, as the audiences for the attractions vanished.
Francis had started selling the discount tickets through a Tix wholly owned subsidiary Tix4Tonight, and the retail outposts became known for their distinctive red and yellow signs with a ripped ticket.
At the time, the company only sold tickets to 12 live shows. Now, the company sells tickets to more than 70 shows playing in Las Vegas, including several Cirque du Soleil productions.
Tix offers discounts of 25 percent to 50 percent. Producers of shows provide tickets that haven’t been sold as of the day the show. (The company even has tickets to shows that are billed as “sold out,” but at lower discounts.)
“On the same day of a show, if the producer has empty seats, they give that inventory to us,” Francis said. “And the producer gets a significant amount of revenue from what would otherwise be empty seats.”
Francis declined to disclose the percentage Tix takes from each ticket sold. However, according to the company’s most recent earnings report, the commissions and fees earned on the sale of discount tickets increased 53 percent to $19.5 million for the quarter ended June 30.
Those numbers exclude Tix’s newer lines of business – golf packages and restaurant deals. Now, when customers come to Tix4Tonight’s retail outlet to book tickets for a show, they can also purchase discount coupons for local restaurants, including 50 percent off entrees, 25 percent of an entire bill or 30 percent to 50 percent off regular buffet prices.
Also, Tix started producing live entertainment shows last year, when it acquired production companies Magic Arts and Entertainment LLC and NewSpace Entertainment. The company produced a Beatles show, “Rain,” and the “101 Dalmatians Musical,” is scheduled to debut Oct. 13 in Minneapolis. Tix also sells branded merchandise for its own live shows and exhibits produced by others, including items for the touring “Tutankhamun: The Golden King and the Great Pharaohs.”
And, of course, Tix is the official vendor for the shows it produces.
“Our whole philosophy in having the three divisions is that they all support each other,” Francis said. “When we take on another business segment, it has to fit into the rest of the company.”
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