As the hospitality sector continues to morph and be shaped by forces old and new, I caught up with Mark Molinari, Vice President of Revenue Management & Distribution at the Las Vegas Sands Corporation, to find out what key issues lie ahead for the hospitality and gaming industries.
EyeforTravel: With OTAs like Orbitz, Expedia, and Priceline jumping into the social/local buying fray, what do you see as the most important impacts for suppliers, and does it represent more an opportunity or threat?
MARK MOLINARI: I believe that the social/local sales will see continued growth within the industry as hoteliers are looking for creative ways to sell distressed inventory. That being said, the models as they exist today are not very profitable for the hotels, so I do not believe that they will make up a significant share of sales. Further, these types of sales are currently being targeted to locals and, therefore, aren’t something that’s going to create a large volume for a hotel.
EyeforTravel: Direct distribution and social buying aside, what do you see as the most critical trends and disruptive new forces for the online travel industry in the coming year?
MOLINARI: I think that most of the market is waiting to see how aggressively Google gets into the hospitality fray. They’ve just launched Google Hotel Finder, and certainly the ITA deal could make Google a significant player in the hospitality space. I’m also curious to see how the price fixing lawsuit in the UK turns out. I don’t know that this case will have a huge impact on the hospitality industry. I believe that a ruling of price fixing would mean that merchant model accounts would have to move to a more traditional accounting model. There would be some back-end financing challenges, but nothing that hotels can’t overcome.
Eyefortravel: The APAC gaming and hospitality industry has seen a strong resurgence in 2011, how does this compare stateside, and what are your forecasts for the second half of 2011?
MOLINARI: We continue to see a resurgence in both group and leisure business in 2011. Because we’re a public company, I cannot share specific forecasts at this time, but we expect to see continued occupancy and ADR growth. The group business is driving much of the increased demand for the Las Vegas market. We’ve seen corporate profits rise over the past year, and it’s my opinion that the corporations sat on the sidelines for much of 2009 and 2010, and they realized that they need to get their people out on the road, and they need to hold meetings and events. Las Vegas specifically is a market that has higher than average attendance for tradeshow and association events, so it’s no surprise that we’re also seeing an uptick on the leisure side.
Eyefortravel: What does the Google-ITA deal mean for the hotel distribution and marketing game? What advice do you have for fellow RM/distribution heads?
MOLINARI: I believe that the Google-ITA acquisition is going to put pressure on the OTAs to further differentiate their services by offering added values, etc. It’s going to hurt the meta search engines such as Kayak the most. I hope that it will help suppliers in the sense that it will reduce some of the leverage from the OTAs, but that may be wishful thinking for now. The advice that I would give to my fellow RM/distribution heads is to resist the push that they will get from the OTAs to offer more value through their sites. I think the industry has gone down the proverbial rabbit hole, and the Google-ITA acquisition could force the OTAs to put even more pressure on the hotels for added discounts or added value so that they can differentiate themselves and show the customers that they are offering value.
Eyefortravel: How is the world of hospitality RM evolving in terms of new best-practices, performance metrics, and technologies? What does the future hold for the modern day revenue manager?
MOLINARI: I don’t believe that the world of hospitality RM is evolving quickly enough. Most revenue management systems are not measuring the total worth of their guests. We are not yet providing guests offers based on their individual value. Most hotels still use RevPAR as a performance metric and are not looking at ProPAR or GOPAR. As for best practices, it’s good to see that some of the larger chains are moving corporate rates to float off BAR. I still think hotels struggle with identifying their true competitive set, and we get caught in a vicious cycle of chasing each other’s rates down. Current revenue management systems don’t do enough to evaluate the total profitability of the guest to determine the true value of demand. I believe that profit will be a more central theme in the future, and hotels will have to do a better job of determining the impact of their true competitive set on their demand. I see pricing becoming more and more sophisticated in that regard.
Mark will be presenting more insights and best-practice strategies alongside 95 other travel industry thought leaders at EyeforTravel’s TDS North America Summit in Las Vegas this September 19-20.
See the full agenda and speaker line-up at: http://events.eyefortravel.com/tdsusa/conference/speakers.shtml .
Or contact the Global Director of Research & Project Management Event Director, Marco Saio at EyeforTravel: US Toll Free: 800 814 3459 ext. 7219, Direct Line London (GMT): 0044 20 7375 7219