With all due respect to the Orlando / Kissimmee / St. Cloud vacation area, the number one attraction for tourists, domestic and international, in the USA has been and probably always will be Las Vegas. Because of the need for workers to service that industry AND the no-income-tax status of the state and its mostly great weather, Vegas has also become the fastest-growing city in the USA drawing everyone from construction and hotel workers to retirees.Every time somebody predicts a bust for Vegas or says that it has overbuilt and will have a comeuppance, the facts prove them wrong. In an article about Venetian-owner and multi-billionaire Sheldon Adelson this week, George Will noted a Life Magazine story from June of 1955 asking if Las Vegas was “overextended.” The city had fewer than 3,000 hotel rooms then, and today boasts 138,000 with 45,000 more under construction.But …Maybe the double-whammy of high gas prices (a VERY large percentage of Vegas visitors drive there from Los Angeles and nearby southwestern states) and a faltering economy due to the mortgage credit crunch is about to have an effect on Vegas’s fortunes. And this is important to watchers of things Mouse-ish because Vegas could be the “canary in the coal mine” for the entire tourism industry for the next few months and years.What makes me think so? Simple. As a resident of the Los Angeles area whose front door is only about a 4-and-3/4ths hours drive across the desert from the Strip (Pax CHP!) I enjoy Las Vegas’s attractions fairly regularly, and have learned over the years that the economical way to do this is to get on the various casino hotels’ mailing lists for email “special offers” that often drastically reduce the price of rooms and throw in all sorts of goodiesand not just at the cheap or middle-of-the-road places, either.Thanks to these e-specials, I regularly stay at the top-end resorts such as the Venetian, the Wynn, the Bellagio etc. etc. at rates that would shock anyone paying “retail” rack rate, and this is NOT some kind of high-roller gambling comp I’m getting, either. As much as I know it sounds like the old-time complaint that one buys Playboy “for the articles, honest!” I really am not much of a gambler, and enjoy Vegas primarily for the dining, the shows, and the spa’s and general relaxation that does NOT include crowding into hectic casinos or doing the forced-march madness of all those Strip-trekkers you see on busy weekends.So what deals are they sending me lately? Let’s look at the email and see:
Photo courtesy of the Palazzo
ITEM: The Palazzothe Venetian’s new deluxe sister hotel/addition wants me to stay for what is a really low $179 per night with free drinks, special VIP check in, discounts on dining, free desserts and other goodies. The rack rate at this hotel is around $300 at a minimum. ITEM: Mandalay Bay has dates in April, May, and June during which a 3-day stay will only cost 2 day’s pay -- a serious savings indeed. ITEM: MGM Grand is having a “sale” for upcoming dates for $99 per night. ITEM: The Mirage is offering 15% discounts on regular rooms, and 20% off on Premium rooms, 25% off on De Luxe, and a whopping 30% off on Tower and Penthouse Suitesthe ones that appeal to the highest of high-end travelers who, you’d think, they would not have to discount for at all, recession or no recession. ITEM: Most telling, the admittedly not ultra-deluxe New York/New York has a 10%-off / $10 at Starbucks / $10 free gaming play deal in April, that escalates to 15% / $10 / $10 in May, then 20% off in June with 2-for-one breakfast at Il Fornaio, $15 off a spa treatment, free welcome drinks and a pass on the roller coaster.
ITEM: The Palazzothe Venetian’s new deluxe sister hotel/addition wants me to stay for what is a really low $179 per night with free drinks, special VIP check in, discounts on dining, free desserts and other goodies. The rack rate at this hotel is around $300 at a minimum.
ITEM: Mandalay Bay has dates in April, May, and June during which a 3-day stay will only cost 2 day’s pay -- a serious savings indeed.
ITEM: MGM Grand is having a “sale” for upcoming dates for $99 per night.
ITEM: The Mirage is offering 15% discounts on regular rooms, and 20% off on Premium rooms, 25% off on De Luxe, and a whopping 30% off on Tower and Penthouse Suitesthe ones that appeal to the highest of high-end travelers who, you’d think, they would not have to discount for at all, recession or no recession.
ITEM: Most telling, the admittedly not ultra-deluxe New York/New York has a 10%-off / $10 at Starbucks / $10 free gaming play deal in April, that escalates to 15% / $10 / $10 in May, then 20% off in June with 2-for-one breakfast at Il Fornaio, $15 off a spa treatment, free welcome drinks and a pass on the roller coaster.
Now the point of this article is not to play travel agent for you or to tout any hotel, and there is a side-issue of the fact that, thanks to “gaming” revenues, Vegas hotels (unlike those in non-gaming destinations such as Florida) can afford to discount the purely lodging-and-dining deals because they expect to make up in slot machines and crap table income what they may give up on room rates and show tickets.
Photo courtesy of the New York New York Resort & Casino
But the larger point is this: The fact that these major players who are usually ahead of the travel industry curve are already pushing spring and summer discount deals in March and April for the time of year when people take more vacations and when you would think they’d be fat, sassy, and full of guests… AND That the deals get BETTER as the summer gets OLDER and any gas-price/economic-crunch problems they anticipate get more impactful on people’s discretionary travel plans … Well, that makes you wonder:
Will DISNEY and the non-Disney hotels in the Orlando area do similar discounts this season to counteract the same economic trends? I’m betting YES. And before you say that more people fly to WDW as a percentage of the whole than drive to Vegas, remember that airplanes burn gas, too. And that rising prices for airfare are inevitable as $100-plus-per-barrel-oil becomes the norm.
I mention all this because if you’re thinking of a vacation trip to WDW (or anywhere) this summer, I suggest you do some serious shopping and looking for deals, because there will be more and more of them if Vegas’s already-being-promoted plans are any indication … And they almost always are.
But as Jim would say … What do YOU think? Will this vacation season, fraught with family belt-tightening though it may be, wind up being a bargain-hunter’s bonanza for voyagers to WDW or Disneyland? And will Disney itself, not to mention its competitors and independent hotels and packagers, respond like the wily Vegas folks have already done to encourage a “yes” decision AND an earlier commitment among vacationers whose leaner pocketbooks and reduced home equity may be suggesting a “not this year” response to their advertising seductions ?
UPDATE: As I was prepping Mr. John's article for posting on JHM, I actually checked in with a few friends who work in the hospitality industry in Orlando. And -- as it turns out -- Mr. Wayne is right. Over the past four months, the average cost of a hotel room in O-town has steadily dropped from being just over $150 a night to the current price. Which is under $125 a night. When you see a price drop like that (Which -- FYI -- bucks the historic trends. Given that the theme parks are usually quite busy this time of year, the price of hotel rooms typically goes up during the month of April) ... Clearly something's up in O-town right now. So please keep this in mind as you make your travel plans for the coming months.
UPDATE: As I was prepping Mr. John's article for posting on JHM, I actually checked in with a few friends who work in the hospitality industry in Orlando. And -- as it turns out -- Mr. Wayne is right. Over the past four months, the average cost of a hotel room in O-town has steadily dropped from being just over $150 a night to the current price. Which is under $125 a night.
When you see a price drop like that (Which -- FYI -- bucks the historic trends. Given that the theme parks are usually quite busy this time of year, the price of hotel rooms typically goes up during the month of April) ... Clearly something's up in O-town right now. So please keep this in mind as you make your travel plans for the coming months.
VERY interesting article. On the flipside though, World of Disney last week made WAY over the projected revenue for the week and has been trending upward for the last month. Seeing as those projections were made back when the economy was in good shape, merchandise at least doesn't seem to be too worried. Can't speak for the resort side though. Good article John.
Thanks Tuckenie...and here's another comparison point I hadn't considered: Really, the "merch side" of WDW is the equivalent of the gaming side of Vegas in that it is the "other thing" people spend money on...albeit w/o the same chance of a return, however slight (if you dont' count eventual resale on Ebay of those items that achieve "collectors item" status--and that reminds me: Those people avoiding the Ratatouille goodies might consider that if they're not selling much NOW, they may be more valuable by virtue of scarcity LATER. Y'never know......but I'd rather put my money on the hard 8. (Smile)
What, Huh?
10% off New York, New York plus $10 at Starbucks isn't exactly a fire sale. Somehow I think that New York, New York would still be dishing 10% in their "regular customer" emails during good economic times.
Also, Vegas is a driving destination. O-town is a flying destination. Despite the price of gas, flights are still pretty cheap. O-town had a much larger problem when no one wanted to fly after 9/11. Now that was an issue. i would actually think that people would be more likely to fly this coming summer because a flight may ultimately be cheaper than a driving vacation, which would actually benefit O-town.
Oh, and having worked in the hotel business for about 10 years, I can tell you that Rack Rate is what people pay on New Year's Eve, Thanksgiving, July 4th, Memorial Day Weekend, and Labor Day Weekend. Rack Rate is the highest allowable rate for any given room.
Actually, in Vegas's case, "rack" is the high rate charged during full-to-the-brim convention times, specifically the CES show and the NAB, but yes, it is the highest and most unusual. The point wasn't the 10% to begin, it was the progression as the summer continues, whereas summer is actually a BUSY season in Vegas except in very late August when the heat drives some away. As for NY/NY, I did mention that it is not, like the others cited, a high-end property...but compared to the no-tell motels in Vegas it is certainly respectable and mid-range.
Furthermore, re. flight rates and gas--have you noticed that three "discount-nofrills" carries have gone OUT of business in the last week or two due to fuel costs? That doesn't mean the majors are likely to do so, but it DOES remove the down-pressure on their fares that such discounter competition creates. And btw, even those "Disney's Magical Express" busses burn fuel, and all those "Free" hotel shuttles have to get paid for somehow.
But hey, those numbers Jim cited in general are telling--he sent me the actual stats, and the interesting thing is that whereas last year the average room rates went UP every month from March through July, this year they're going DOWN. Since demand is higher in summer's full season (as anyone who's been foolish enough or compelled by school vacation schedules enough to fight the lines and crowds at WDW knows) the idea that they'd REDUCE the prices in PEAK season says a lot about what they're expecting.
Of course, OPEC could fold tomorrow, mortgages could suddenly re-set at lower rates with no penalties, property values could skyrocket again, and feelings of job insecurity could vanish in a puff of smoke and mirrors all in time to spent 4th of July watching fireworks at EPCOT and gladly paying through the nose for the priviledge.......but I doubt it'll happen, don't you?
I vist vegas once a month and I have many connections in vegas and I can tell you vegas is not hurting it is currently in its biggest construction hotel booom since Wynn introduced mirage/Ti Recently the Palazzo opened and Encore is expected to follow soon. These discounts John happen all the time, I have friends who recieve these emails through the e-clubs and it is common knowledge that in off seaons you can get vegas at a lower rate... if you look at th 99 rate at mgm grand its only valid certain dates that arent historcially busy but if you look at the weekend rates for the mgm business as usual. On any given weekend Vegas occpupany still remains at 85-90 percent . On any given week vegas is the -number one convention destination and the occupancy is in the 70 percent range coming up in april is the national association of broadcasters convention for a week 100,000 people converge on that town and sell out all the hotels. Again I dont think vegas is hurting you will always find discounts at mgm , and lower rates at the palazzo they entice you in then they get to gamble , buy expensive dinners , and go see great shows. Please fact check your articles before writing it.
Lighttragic, the facts are in--see Jim's addendum--and I freely stated that big events like NAB and CES bring in big crowds, but the whole point is to keep those rooms filled all the time, and that is why they are discounting deeper in compensation for gas price rises and economic fears. I never said Vegas was "hurting" only that it is (a) compensating as it always does for economic realities and that (b) other vacation/resort locales like Orland often follow its lead as Jim's sources info suggests is actually happening.
BTW, I attend the NAB regularly in my professional capacity and will again upcoming, and their hype-level to get attendance this year has been MARKEDLY higher intensity. There's nothing wrong with that, but it costs money and they wouldn't spend it unless they felt they needed to do so. Of course, with many network and local stations cutting back of late due to fall-offs in advertising sales, the WGA strike, and other economic reasons, that means the pool of folks who attend NAB shrinks as those employment spheres shrink, too.
For those not familiar, the National Association of Broadcasters (NAB) is a convention that runs a wide gamut of local station execs, technology engineers, on-air and off air personnel, movie and TV studio folks, computer hardware and software people, and every kind of gizmo and tool user and vendor associated with the whole broadcast media universe and everyone who wants to sell things to them or schmooze them. The convention is huge for good reason and is, as I've stated, one of the two biggest to hit Vegas every year. HOWEVER...even that industry has had some economic contractions, which explains why even though I'm registered and going, I am getting MORE brochures, MORE emails, and MORE pitches to both attend in general and visit particular booths specifically than ever before.
Am I saying there'll be deserted halls at the LV Convention Center? Far from it. I'm saying that to make SURE they get the attendance they need, they're making an extra effort--and so are the Vegas hotels for this summer season and, it seems. so are those in Orlando.
Those are the facts. Check 'em yourself and see.
I would think that John is right. Disney and the Orlando metro area have to get on board with this model, or they run the risk of losing the young, urban consumers that they are spending so much to attract. As a member of that demographic, I have to say that Vegas already caters to us. It's already a huge uphill fight for Disney. They might as well start offering discounts.
I'm not sure I'd call the numbers Jim showed us "facts" ... statistics by themselves are completely meaningless. There could be other factors influencing hotel rates that have nothing to do with the softening economy. Without some detailed analysis by a statistician, I'm not willing to take those numbers as anything more than, well, numbers.
All I know is that attendance at WDW is still through the roof. I haven't seen any signs of softening hotel occupancies and there certainly haven't been any deep discounts released. Since Disney plans these things well ahead of time (discounts and free dining are already out for September) based on advance bookings, I wouldn't hold my breath looking for any cheapies any time in the near future.
This article, while moderately interesting, is really nothing more than some wild speculation based on Mr. Wayne's decidedly unscientific analysis of current Las Vegas discounts (which may or may not have any bearing on coming discounts in Orlando) and some unverified numbers that Jim provided.
I think next year might be a good year to get some deep discounts on Disney vacations, but for 2008 I wouldn't hold your breath. Next year the pent-up demand will be mostly exhausted after two solid years of the YoaMD and people will most likely refrain from booking 2009 trips this year out of fear that the economic downturn will continue.
Remember, most people already have their '08 trips booked and it's not very likely many will cancel because gas costs another 20 cents a gallon. Who wants to disappoint the kids over an extra hundred bucks??
Whatevah. Listen, there's a larger issue here we've all been talking about in other threads--notably the ones about the bridge to Liberty Square and the one about closing down much of PI right before the summer season--planning and how it is done successfully.
If you're inept, what you do is this: You WAIT for your business to slack off (lower occupancy, fewer customers, whatever) and THEN you act to try to "recover" it.
If you're wise, what you do is this: You ANTICIPATE the POTENTIAL for it to slack off and take action PROACTIVELY in advance of it. If you do this right, nobody even notices a slight downtick.
It applies to whether you wait for a bridge to get so rotten you have to shut down or divert a parade during busy times to fix it vs. doing it during the "off season" with planning aforethought, or whether you shut down dance venues with no immediate replacements right as the biggest population of spenders is out there looking for somewhere--anywhere to dance.
The people who manage big hotels and resorts, in Florida, Nevada, or, if there are any, Greenland, have that same choice, and the most professional of them are planning months, quarters, and years in advance for everything from how many employees to seek to how many sheets to buy to how much shrimp to stock in the all-you-can-eat buffet. In this modern era, with computer help, this has become a pretty established and effort-free science. Smart companies have no excuse. Dumb ones nobody to blame but themselves.
We won't KNOW that this expectation is real until we see lower prices in a big way, but my simple point was that we're already seeing that in an unusual way in Vegas and, when Jim looked into it, he got hard numbers that say Orlando's following suit (numbers he abbreviated here but shared with me AFTER I'd written the piece in great detail which bear this out.)
You can agree or disagree--your choice. My point was the LARGER lesson re. planning and managing anything AND to say to those who are making practical decisions about where and how to spend their upcoming summer....well, this might work to your benefit, so stay alert and look around before you snap at the first deal you see. In fact, while I wrote this as a "maybe" to publish here, Jim insisted that due to the TIMELY nature of the information it needed to run right away. And so it did. I hope it is useful--genuinely useful. 'nuff said.
I did say that the article was moderately interesting and that was mostly due to its relevance in terms of keeping people informed of the potential for coming discounts.
But at the same time, I'm just not sure the fact that there are (very modest) discounts being made available in Vegas necessarily translates into pending discounts in WDW. The audiences for the two locales and the overall traveler profiles are very different.
Fair enough, but I repeat--I get these offers from Vegas hotels virtually every week, and the timing and degree of the deals being offered now is substantially different than the usual. That's what caught my eye, and that's why I wrote the piece after checking with sources there that I was right. When Jim found that Orlando sources agreed, well, that's "whyfor" the article was posted--because it's true.
For me, it comes down to the difference I noticed when I lived in NYC. When I went to the Titanic exhibit in Atlantic City, I was on a Greyhound bus full of senior citizens. Whereas the Hampton bus companies both are pretty nice. And that's really something I hope the tourism biz explores, because it'll just bring in more relaxed guests (be sure to get the bus/hotel package!) with a little more money to spend.
I think a BIG difference is that Vegas caters to locals and doesn't get a BIG international clientele (why go to Vegas when Monte Carlo or Singapore are closer). BUT WDW and DL do get a BIG international clientele. AND with the weakening dollar, it makes sense now to go to DL or WDW. A softening economy is going to hurt non-Disney lodgings (more than Disney lodgings) because outsiders (non-East coasters, new visitors and international visitors) are going to stay on property.
This is the same issue that happened about a month ago when a BIG investment house downgraded Disney because of this very same issue and Disney said ABSOLUTELY NOT. See http://www.fool.com/investing/general/2008/01/29/dont-sell-disney.aspx
Great Job, Johnwayne! I enjoy reading your comments as much as the articles themselves (no offense, Mr. Hill) and I'm glad you're on board as a contributor too! You seem to have great insight into the entertainment industry and It's nice to see the author of an article doing follow-up comments as well.