Home » VT News » PGP: MGM Hates Your Travel Agent, Too

PGP: MGM Hates Your Travel Agent, Too

By Chuckmonster on Tuesday, 24th November 2015 10:55am
  » filed under Las Vegas  comments: 16

   

MGM Resorts International, owners of Aria, Bellagio, Circus Circus, Excalibur, Luxor, Mandalay Bay, Mirage, MGM Grand, Monte Carlo, New York New York and Vdara, have made a lot of waves lately via their Profit Growth Plan, a company program designed to increase corporate profits by cutting costs, optimizing services, adding fees, instituting variable pricing models and limiting offerings.

One could say that the Profit Growth Plan started with the institution of resort fees roughly five years ago. Resort fees were explained as a way to make MGM property price points more appealing in the listings on 3rd party travel websites. A surely unintended byproduct of this program (yes, sarcasm) was MGM would reap more profit from room bookings by paying lower fees to 3rd party retailers and recouping the rest by charging the balance of the loss/leakage to their guests upon arrival. But... hey... you get to print out your boarding pass and make free local phone calls! Hello? Can I speak with Carrot Top?

Now, as part of MGM's profit growth plan, the company intends to realize further income by asking customers to help them put a boot on the neck of 3rd party travel retailers. The target? The 15% cut MGM pays to Expedia Inc. (Expedia, Hotels.com, Hotwire, Trivago, Travelocity, Orbitz etc), Priceline Group (Priceline.com, Kayak, Booking.com, Agoda, OpenTable) and even family-owned shops like Jadd Fong Travel in north east Albquerque, New Mexico.

This weekend, MGM filed a trademark application for the slogan:

PLAY THE SMART HAND. BOOK DIRECT

MGM is appealing to you, the consumers, to help them give Expedia, Priceline and Jadd Fong Travel a swift kick in the nuts. Never mind that they've replaced the fancy Gilchrist & Soames quality toiletries with generic brands, charge you an extra dollar for beers on Friday and Saturday nights, stopped comping the decent booze and in favor of the cheap stuff... MGM needs your help!

So you don't want to help MGM smack down Expedia? Are you sure? Allll riiiight....

VegasTripping has learned that MGM Resorts International is going to begin penalizing guests who book via third parties, not by direct confrontation but by withholding services and - ding ding ding you guessed it - adding fees!

Here's an example: in the case of a guest who books via third party retailer, should the guest be forced into late cancellation or be a no-show for their reservation, they will be charged a much larger cancellation fee than if they booked directly with MGM. Prices could range from a larger percentage of entire stay, the entirety of the first day, or make them pay for the whole trip.

This policy will not exist for customers who play the smart hand and book direct. "If you book with us, we won't kick you in the nuts when you late cancel. Actually, we're still going to kick you in the nuts, just not as hard."

The exact details of these "threatened fees" are unknown.

Should MGM move forward with this new policy, it is only one small step away from instituting an airline-inspired "non-refundable" or "no cancellations" line item on third party travel agent websites.

Simultaneously with the filing of the "Play The Smart Hand. Book Direct." trademark application was this Reddit AMA featuring Q&A with a revenue analyst for a major Las Vegas casino corporation (pick one, there are only two) who says "I set the room rates for the Las Vegas Strip... ask me how to snag a deal or ask me anything."

Mr. Reddit AMA offers advice at the outset, the third line of which ends in an eerily similar shout cap refrain:

Book directly though the hotels website! BOOK DIRECT! BOOK DIRECT!

Despite being a firm believer in cosmic timing, I don't believe in serendipity, particularly when it comes to the casino industry. Props to MGM revenue analyst guy for getting the MGM message out and playing Reddit like a cheap violin.

Big thanks to JohnnyJiggles and MissMonkay for the tips.








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Comments & Discussion:

They're on quite a roll here...

um, I don't think he is plugging the MGM mantra for their sake, seems pretty balanced to me regarding the various brands, reading the comments. He also puts a direct link to an earlier VT article about resort fees, see here. With the current PGP exposure you are doing here, I can't imagine MGM PR actively sending people to this site:

https://www.reddit.com/r/IAmA/comments/3tu7zp/ama_i_set_the_hotel_room_rates_for_the_las_vegas/cx9m6ud

@jimmy i completely agree with you. missmonkay and i looked at the ama for a long long time trying to decipher if it is a plant. i think this guy went off-road based on stuff they're been talking about in the office, probably not sanctioned. seeing the link to the VT resort fee explanation sealed the "not a PR plant" argument for me... no MGM pr goon would link to VT.

So this is ny SLS recovery plan: let everyone else screw themselves out of a customer base. The cutting back on stuff is the kind of thing the struggling hotels probably already do, but just not wrecking everyone's wallets in fees sounds like a sound financial strategy right now!

This is pervasive pretty much all markets and companies. I know a few reservation agents at non-MGM properties and they all say that they are much more likely to upgrade direct bookings than non, per the company line. I know there are some variances between cancelation policies based on where you book, but blatantly advertising this would be a bold move by MGM.

Most resorts, even outside of Vegas, will price match rates found online. I use expedia or vegas.com to quickly aggregate prices, then book direct after finding the best hotel/deal.

To be quite honest, this doesn't surprise me at all. I'm honestly surprised that some hotels haven't gone the route of Southwest Airlines and not be available via OTAs.

One other thing to look at in regards to the OTAs is the consolidation within the industry in recent years. The Priceline Group bought Kayak in 2013 (while Kayak is mainly a search site, it also is a booking site, as you can book directly through them) and Expedia Inc this year has bought out Travelocity and Orbitz, meaning that the biggest travel sites are in the hands of two companies (Both companies have purchased other travel sites in the years prior to their most recent deals.).

Well I usually book thru Expedia or Southwest depending on the offers. Booking direct wouldn't work for me because i prefer to bundle but if you are going to jack me up on fees then I would change my method or just stay in non MGM properties until they came to their senses. With that said I have never cancelled a trip or even askked for an upgrade so what fee could they possibly charge me?

Oh why oh why do big businesses like MGM let the beancounters be cheap and then nickel and dime people to boot. It never ever works, charging more for less, but they keep trying. It should be a class in business school by now "how to alienate your customer base in two easy steps 101".

In the long run, it won't save them anything.

I say Profit Growth Plan = Murren fired and MGM in or near Bankruptcy within 3 years.
This fake economic improvement won't last much longer.

Not that much different than the Wynn get 15% off by booking direct thing..(i.e. Pay 15% more if not booking direct) in Vegas though, except for Amex fhr, using an agent never seems like much of a deal compared to booking direct with a promo code.. And if you gamble at all they won't comp the room in the back end if you didn't book direct

I can't reserve my MGM-owned hotel room fast enough!!!

Hi All,

First off: Love VT. And everyone reads it. Caesars, Palms, MGM, Wynn - everyone in PR, marketing, operations, finance, etc. To the point of us actually being in meetings to discuss posts on this website. And I will say, all of us love VT too...except when the gun is pointed at us. Those of us in the industry love Vegas and truly want this industry to thrive, however, those 'running the show' it seem like do not have the same passion.

Second - I honestly had no idea of the trademark. Booking direct actually came from before I started in Revenue Management. I had a sh!t experience going through OTAs and I really do want those coming to Vegas to have a good experience - I don't want what has happened to me.

Third - I no longer work for either company but am still in the casino industry.

(p.s. I would prefer as much anonymity as possible. Vegas is a small town.)

@VegasRateRedditor - are you able to share (if you know) a rough breakdown of how much business these OTAs would bring into the property vs booking direct? Like is it 5% of rooms booked per night, or 50% of rooms booked per night?

If it is sizeable, would be interesting to see if this is the last straw after the resort fees etc and maybe we would see Expedia etc retaliate by burying MGM properties in their search results, skewing algorithms so that anyone searching for hotels in Vegas are offered rooms at every other brand BEFORE hitting MGM properties in the list. The airlines have been playing this battle with OTA providers for quite a while now.

I guess I'm curious how much of a hit MGM might take (or Expedia) through this move to not just push people to book direct but to actually PENALIZE people for not doing so...it's one thing to incentivize and price match etc like many hotels will do (ie. book direct and 'we'll match the best rate you can find'), but it's another thing entirely to try and add extra fees to bookings later...customers will be PO'd when they find out, which probably is more likely to result in backlash at the desk (i.e. MGM) than backlash at the OTA.

Sounds as though management embraced OTAs during the tough times but now that things are looking better, OTAs are bad for them.

Does anyone have any data regarding the percent of hotel rooms typically filled via OTAs?
If MGM is able to fill their rooms via their own marketing, then why continue with OTAs? Or does MGM want to continue with OTAs to gouge the unknowing? If so, this to me is a short term profit plan that leads to pissed off visitors and results in less future customers.

Profit Growth Plans are all the rage on wall street these days. Starting 2-3 years ago when the economy started to pick up, companies of all types started looking into how they can raise margins. There has been a mix of plans that screw employees, customers or both but they are in vogue for a reason. From a bottom line, how much moeny did we make, viewpoint, they work. At least in the short term, which is all wall street cares about.

In this day of micro second trades, the 5 year impact due to a program designed to give gains over 3 years is being totally ignored. Couple that with boards and executive suites still largely filled with baby boomers looking for that one last big bump before they cash out and you can bet we are 5 to 7 years before companies start competing for our business again. Right now they are all quite happy to give us equally shitty value and service in the name of profits.

@JimmyBond/wpsteel66

I don't have recent numbers - but imagine the major two are getting around 1 million room nights per year. Recently, OTA booking have dropped as the consumer is getting smarter.

In one year, how many commercials do you see for Expedia? Orbitz? What about Wynn?

The thing is these OTAS have marketing and advertising power with astronomical budgets. There's a vested interest in them to advertise since they get commission off every room night booked (Vegas or not). So we look at it like free marketing.

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