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Wednesday, November 3, 2010

Casinos and Hotels Join Forces

Editor-in-Chief Glenn Haussman talks about how the casino and lodging businesses are finally partnering with each other. It’s about time and a sure win-win.

Reprinted from www.Hotelinteractive.com

Here’s something I never expected to have happen in my lifetime. Casino resort executives are finally seeing the wisdom in partnering with traditional hotel companies. For time infinitum the gaming business has refused to associate itself with hotel companies. And back in the 1990s execs at hotel companies started feeling the same way, essentially disassociating their companies from casino gaming by divesting in them.

Since then it seemed as if both sides were intent on pretending the other didn’t exist. It’s been a really Odd and Great Divide that’s had me head scratching for years. In conversations with executives throughout the year it became apparent each camp wasn’t even open to the notion each side could learn something from the other.

Part of the reason was that casino companies viewed themselves through the prism they were gaming companies and that rooms were just a fungible function of trying to keep people at the gaming tables longer.

So instead of realizing they had complementary skill sets that could be combined to create powerhouse profits, they just played in their respective sandboxes. Each group was content to go at it alone ignoring the other side’s ineffable abilities. For example, casino companies are masters at customer relationship management. They totally understand the individual characteristics of their best guests and for years have been tailoring specials and deals to get those people in the door. And to woo the biggest players of all, casino companies have developed an innate ability to ensure preferences are always respected.

Hotel companies are experts at distribution, something casino companies haven’t mastered. So while they should have been looking for ways to work with each other, sky high profits between the post 9/11 era and when the declines that quietly began in late 2007 distracted these two groups from seeing The Light.

For years when I would talk to executives about why partnerships between hotel and gaming companies should happen they would look at me like I was crazier than an NBC executive deciding to dump Conan.

But now it seems as if both of these sides are ready to bridge the chasm. They’re starting to realize each side’s mission is the same as the other: Get people through their doors that will pay a price higher than they would to stay with a competitor.

It’s amazing what effect the steepest decline in the economy in 80 years can have on getting folks to think of creative ways to work together.

Essentially what’s going on is that hotel companies during the past few years have looked beyond their core goal of selling franchises and helping those owners fill rooms. During the last few years most of the major hotel companies have realized they’re sitting on a distribution goldmine. Marriott has the Autograph Collection, Choice has Ascend Collection, IHG just unveiled Intercontinental Alliance Resorts and Wyndham has just partnered with Planet Hollywood – which has a Las Vegas resort—in a franchising deal.

The hotel companies have realized they’re sitting on great distribution systems that literally reach hundreds of millions of people a year, and can leverage this to not only reach those looking to stay on the Las Vegas Strip. Except Hilton, none of the major hotel companies have a company on The Strip. And that’s the genesis for these relationships.

The hotel companies would love to be able to offer properties not currently in their portfolio. The casino companies finally realize no matter how deep their databases are, they don’t even come close to the number of eyeballs that check out hotel sites.

Take The Cosmopolitan, which opens Center Strip on December 15. The company is partnering with Marriott International and has entered into a distribution agreement with the hotel company’s Autograph Collection, a portfolio of upper-upscale and luxury independent hotels and resorts. More importantly, it gives CEO John Unwin and his team access to 33 million Marriott Rewards members, which should help level the playing field in a tight market.

“Marriott International has the best engineered distribution system in the business. This gives us opportunity to utilize that system, as well as a great enterprise sales team of execs that will be selling our product to group and convention customers,” said Unwin.

Marriott International’s President & COO Arne Sorenson is equally bullish on this deal, he told us. “We are very thrilled to have them as the biggest hotel in our system. I think we have many customers interested in going to Las Vegas and us being able to welcome them to a hotel on The Strip is important. Additionally, of the group customers we have had over the years, many go to Vegas regularly. It has become a destination that belongs on the rotation of many meeting shops and this gives them something now center-Strip,” said Sorenson.

Boiling it down further, it’s just smart business and something that should have been done years ago.

“The alliance with the Las Vegas Sands Corp. and IHG’s InterContinental brand creates a shared opportunity to give our guests access to leading luxury resorts in Las Vegas,” said Jim Abrahamson, IHG’s president for the Americas.

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