One year after an unprecedented and protracted meltdown in
their meetings business, Las Vegas hoteliers finally sense a recovery in the
making. In the meantime, however, the prices and perks precipitated by the
crisis continue to be strong hole cards for planners looking to negotiate the
best possible deal.
"Over the past two years, we've gone from a peak demand
cycle to a recession," said Richard Harper, senior vice president of sales
at MGM Resorts International, formerly the MGM-Mirage, which operates 11 major
meeting properties, including The Mirage, Bellagio and MGM-Grand, as well as
the new Aria and Vdara hotels at the company's CityCenter complex. "Negotiations
are not as stringent as they were two years ago, but they are not as generous
as they were six months ago."
Maureen Robinson, director of sales at the 2,163-room South
Point Hotel & Spa, said that as a result of the negative publicity the
destination generated last year, planners mistakenly conclude they are
desperate for business.
"The word is out there from somewhere that Las Vegas is
dying, that we will give you the best rates, free food and beverage, whatever
you want," Robinson said. "As a result, that is now the perception
among meeting planners. So when they call us, my response is, 'Oh please, we
can't go that low.' "
Robinson's concern, shared by a number of her peers, is that
permanent damage is being done to a Las Vegas pricing structure that
historically offered good value as a key element of its proposition for meeting
buyers.
"The pendulum is still on the side of the customer when
it comes to negotiation," said Sam Messina, director of sales at the
2,950-room Las Vegas Hilton. "It's a very competitive marketplace that has
a good amount of inventory available. Planners do have more leverage these days
because they have many options and offers to choose from. When it comes to
negotiation, there is more flexibility than there has ever been."
Athene Garfield, director of revenue strategy at the
548-room JW Marriott Las Vegas, a luxury property located 20 minutes from the
Strip, noted that "as far as the negotiation process, everything is out
there now for a customer. Most of the large meeting hotels now have a 'Meetings
Matter'-type promotion, with different packages and discounts, with 25 percent
attrition clauses and so on. Planners know where the possibilities are for
negotiation."
For example, Garfield said, most planners familiar with Las
Vegas know that comped rooms currently are being awarded at ratios of 45 and
even 35 rooms, instead of the traditional 50. "We're also doing more
upgrades for VIPs, offering more VIP amenities and being a little more flexible
in terms of attrition," she said.
Depending on group size, Messina also offers better comp
room ratios, more comped suites and staff rooms and reduced costs for meeting
space. "The bottom line," he said, "is that planners are pretty
much asking for discounts on everything these days, from food and beverage to
A/V."
At the 3,933-room Bellagio, senior vice president of hotel
sales and marketing H. Fletch Brunelle sees one trend helping hotels weather
the down market. "Attrition was more of an issue last year than it is now,"
he said. "In terms of being flexible with attrition, there has been a lot
more favorability for applying attrition to future programs."
Vegas hoteliers agree that the worst of the crisis is over
and that the market will return to normal over time. By definition, that means
that the deals of the last year will become the stuff of legend rather than
ongoing business.
"As we see more demand and more stabilization of the
market, the kinds of concessions we're seeing now will diminish," Messina
said. "We're confident that we're turning the corner and that the market
will get back to normal in terms of demand."
Traditional notions of negotiation also will change, said
Mark Cunningham, executive director of sales at the 703-room The Palms Casino
Resort and 599-room Palms Place Hotel & Spa.
"One of the changes we see in the marketplace is that
planners are looking for one-stop shopping," he said. "They want
everything in one package. In terms of what they're asking for, they want
flexibility in food-and-beverage menus and minimums. They want upgrades. We don't
see those as concessions. We see them as delivery of value."
Based on his own current meeting business booking patterns
and overall market observations, Cunningham predicted Las Vegas will return to
full strength, in terms of demand and pricing, in the next 12 months. "We'll
start to see more consistent demand for rooms booked further out," he
said. "We're seeing the increased demand now, but it's still very
short-term business."
Harper agreed with the notion that, in the future, selling "total
value" in a bottom-line package will start to transcend traditional
concessions as the currency of a genuine win-win situation for both the meeting
planner and hotel.
He also cautioned that a more level playing field for hotel
operators is essential to the long-term health of the Las Vegas meeting
industry. Major hoteliers, such as MGM Resorts International, Las Vegas
Meetings by Harrah's and others, must protect the bottom-line integrity of
their brands and business models, Harper said.
For her part, Robinson said she is not so sure the Las Vegas
market will ever return to its glory days, simply because many planners now
assume that the incredibly low pricing and more liberal concessions of the past
year will endure forever in a changed meeting landscape. In order to prevent
that assumption from growing any further, hotels must draw a line in the sand.
"To protect the integrity of your business,"
Robinson said, "at some point you have to say, 'I can't do that. I think
you need to go somewhere else.' "
This story originally
appeared in the August 9, 2010, edition of Business Travel News.