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Face it, everything your saying is either incorrect or irrelevant. Resort fees have been a fact of life in Vegas for 15+ years, and excepting periods of major, worldwide economic dropouts (which were not casino/resorts industry specific issues), visitation, revenues, and profits all rose significantly. So, really, the resort fees have been a resounding success for the casinos. If the fleas don't want to pay them, and won't come, the casinos aren't losing anything, and could care less.
Perhaps you can fill me in on which parts are incorrect.
Quote:
Originally Posted by BBMW
As far as shareholders demanding maximum value, the shareholders OWN the company, they can (and in the case of large shareholder often do) fire and hire management. The companies exist for the benefit of the shareholders. The companies need to keep their customers happy enough keep them doing business with the company (and note I mean REAL customers, who are willing to pay what it takes to provide the product or service, not wannabe customers who can't afford to or are unwilling to do so. It's the latter that are pissed oft. But as I said above, no one who matters cares.
The board usually holds majority stake in the company, so it's not really about what the investors want, it's about what the board wants.
The fact that someone may not make enough to afford $500/night rooms, $300 visits to the restaurant, and to blow $5000 on craps in one sitting doesn't make them any less customers or any less relevant. The people who can afford to blow that kind of money are in the extreme minority which really exemplifies what I am saying. The rich minority isn't visiting Vegas right now and probably won't be for a while to come so who is going to pay the bills?
For that matter, the business plans for these resorts don't depend on that particular gambler. Nobody would invest in a resort of the size that are built here if the only clientele they could expect to attract was in the $1M+/yr salary range. There are not enough of them to book 1500 rooms in each resort and places of this size would not be feasible to build.
If you were talking about an ultra high end, exclusive resort with only a couple hundred rooms, maybe, but that's sure not the norm.
You do realize that a large percentage of hotel rooms (whether in Vegas casinos or other hotels world wide) are sold at discounted wholesale prices to consolidators who resell them at a mark up. I'm pretty sure the big on-line hotel/travel sites work this way, or front end other consolidators. So the casino only sees a fraction of what the actual guest pays for the room. The resort fee, which is charged directly to the guest, is a way for the hotel operators (again, not necessarily LV casinos, but they've gone for this in a big way) to recapture some of revenue directly from the guest. Of course the guest may not care why or like it, but if you want to know the real reasoning, that's it.
Last time I looked to book a room in Vegas on the web, the resort fee was immediately exposed, so it's not a surprise.
Why would they need to do that if the whales can float the whole shebang?
The resort fees definitely surprise many. All one needs to do is peruse reviews on a site like travel advisor where practically every other comment has something to say about the resort fees.
Resort fees are very clearly disclosed everywhere once a person books a room on every site that takes a reservation, that's the law. They also disclose estimated taxes that will be paid. To not disclose either would be illegal. Now someone may not read all that, but they were made aware and quite clearly.
They gained a lot of traction in 2008 and 2009, when the booking sites got aggressive and started demanding certain price points. I know someone who worked in the pricing department at Sahara as it was happening so I fully get where it came from and how its evolved. Expedia would tell the Sahara look if you don't give us rooms for $19 on a low demand day(just an example), we're going to intentionally move you to the back of our listings so that our customers will almost never see unless they type in "Sahara" into the search box. They demanded this because traffic was so low, they wanted to be able to advertise $19 rooms in Las Vegas to attract traffic to Expedia. Problem was it cost Sahara $25-30 to service the rooms. They were closing down floors and towers to reflect the low business in the recession, so they had a very good handle on room servicing cost. So they only thing they could do is say ok, $19 room and we charge $15 resort fee. They would net about $12-15 from Expedia and get the resort fee and break even on the room and hope they got a little gambling or food margin from guests in the building.
Then as everyone did it, Expedia (just using them as example, all sites did this) started demanding higher commissions and more control over pricing. It was an ugly time, resorts had no choice but to work with them and the booking sites were livid that the resorts found a way to charge more and not pay commission on it. Some sites actually did take listings down to the bottom or just stated they had no rooms available at that location. Resorts then got aggressive with the fee because none wanted to lose money on a sold room.
So now after all the fees and commissions they charge, Expedia today is getting 20-40% of that room price you are paying. The higher amounts are what some properties pay to get page one exposure on hotel searches. Most consumers don't look past page one on Expedia so not paying a fee and not giving them their asked for price pretty much leads to no business for the hotel from that site. The only way this all gets cleaned up is there is something of an overhaul of the entire model. The booking sites amazingly get no blame from this from consumers, but they are the reason for the resort fees being where they are now. If they didn't go through their methods to get paid more and hold resorts hostage to super low room rates, then resorts would have few or no fees, the full prices would be advertised and the booking sites would go back to getting 7-8% of the price.
The hotels could just lower prices by 20%-40%, include the resort fee, and cut Expedia and company out. That isn't a business relationship on equal footing. The booking sites make nothing if the hotels don't give them rooms to sell.
I'm not sure if what you say is true, but I would never let an advertiser tell me how to price my product, particularly if that meant that I would lose money.
Nope. Don't live in Vegas (although I was thinking about moving out there at some point. But the rising californication is turning me off.) And have nothing to do with the gaming industry. I do gamble (if playing poker is considered gambling) occasionally.
I just find it hilarious that people like you and Equidox think the casinos owe you anything. If you don't like what and how they're charging, don't give them business. But the level of butt hurt being displaying when you find out they could care less is highly amusing.
Vegas has the highest concentration of hotel rooms anywhere in the world. And prior to our little heath issue that brewed up a month or three ago, they were essentially keeping them all filled, even charging the fees you hate. What does that tell you?
I'm not butthurt about it at all. I voted with my pocketbook and stopped gambling on the strip as much.
The rooms were being filled by conventions. The conventions are gone, so now what?
Nope. Don't live in Vegas (although I was thinking about moving out there at some point. But the rising californication is turning me off.) And have nothing to do with the gaming industry. I do gamble (if playing poker is considered gambling) occasionally.
I just find it hilarious that people like you and Equidox think the casinos owe you anything. If you don't like what and how they're charging, don't give them business. But the level of butt hurt being displaying when you find out they could care less is highly amusing.
Vegas has the highest concentration of hotel rooms anywhere in the world. And prior to our little heath issue that brewed up a month or three ago, they were essentially keeping them all filled, even charging the fees you hate. What does that tell you?
Conventions have been the backbone for awhile. My uncle has worked for several properties and the conventions are the bread and butter of many of the strip properties because they double, triple and quadruple dip, etc.
If Vegas reopens on the backs of whales and Joe America without that convention traffic, it's screwed.
Perhaps you can fill me in on which parts are incorrect.
The board usually holds majority stake in the company, so it's not really about what the investors want, it's about what the board wants.
Well that right there for one is incorrect. The board DOES NOT hold a majority stake in the
companies. If they did own the majority stake, they probably wouldn't be listed on the
exchanges as they would be private companies. Most of the casinos are set up as publicly
traded stock coporations.
Here are the big players:
LVSands Market Cap 35.101B
MGM Market Cap 6.826B
MGM Growth Properties LLC Market Cap 7.679B
Caesars Market Cap 6.813B
Boyd Market Cap 1.864B
Eldorado Market Cap 1.804B
Red Rock Resorts Inc Market Cap 1.128B
I know I am missing a bunch but wanted to stick to just the ones with the
majority of the Las Vegas casinos.
Notable exceptions:
Golden Nugget owned by Laundy Inc which is a subsidiary of
Fertitta Entertainment Inc.
Station Casinos LLC (portion owned by Red Rock Resorts)
We can start with your line below about the board owning the company. Some board members will have large holdings, which is how they became board members. But the shareholders get to vote on the board membership. A lot of time its rubber stamped. But if the shareholders, especially the big ones, are unhappy, they can oust and replace board members.
The relevance of any particular set of customers to a property is directly related to how profitable they are to the property. If particular set of customers isn't profitable enough to the casino, they'll make them more profitable by charging them more, one way or another. When they do this, the casino marketing departments research how this will effect patronage. They get a good read on how many will pay vs how many will walk. They're good at this. It's their job. And by results, it appears that they're right. And this pisses you off.
Quote:
Originally Posted by equid0x
Perhaps you can fill me in on which parts are incorrect.
The board usually holds majority stake in the company, so it's not really about what the investors want, it's about what the board wants.
The fact that someone may not make enough to afford $500/night rooms, $300 visits to the restaurant, and to blow $5000 on craps in one sitting doesn't make them any less customers or any less relevant. The people who can afford to blow that kind of money are in the extreme minority which really exemplifies what I am saying. The rich minority isn't visiting Vegas right now and probably won't be for a while to come so who is going to pay the bills?
For that matter, the business plans for these resorts don't depend on that particular gambler. Nobody would invest in a resort of the size that are built here if the only clientele they could expect to attract was in the $1M+/yr salary range. There are not enough of them to book 1500 rooms in each resort and places of this size would not be feasible to build.
If you were talking about an ultra high end, exclusive resort with only a couple hundred rooms, maybe, but that's sure not the norm.
Everything's gone temporarily. But this is an externality. The conventions will be back. The people who don't care what they spend will be back.
Quote:
Originally Posted by equid0x
I'm not butthurt about it at all. I voted with my pocketbook and stopped gambling on the strip as much.
The rooms were being filled by conventions. The conventions are gone, so now what?
Well that right there for one is incorrect. The board DOES NOT hold a majority stake in the
companies. If they did own the majority stake, they probably wouldn't be listed on the
exchanges as they would be private companies. Most of the casinos are set up as publicly
traded stock coporations.
Here are the big players:
LVSands Market Cap 35.101B
MGM Market Cap 6.826B
MGM Growth Properties LLC Market Cap 7.679B
Caesars Market Cap 6.813B
Boyd Market Cap 1.864B
Eldorado Market Cap 1.804B
Red Rock Resorts Inc Market Cap 1.128B
I know I am missing a bunch but wanted to stick to just the ones with the
majority of the Las Vegas casinos.
Notable exceptions:
Golden Nugget owned by Laundy Inc which is a subsidiary of
Fertitta Entertainment Inc.
Station Casinos LLC (portion owned by Red Rock Resorts)
Who are the majority shareholders? A company being publicly traded has zero bearing on whether or not board members hold a controlling interest. There are many, many companies where the board holds a controlling interest. In fact, if you want a controlling interest in any publicly traded company all you will need to do is buy 51% of it and you'll have a seat on that board.
Nice try trying to paint me as the bad guy. I never wrote I get satisfaction from business and employees suffering. This is about the end of corporate resort fees and overpriced rooms and you know that. Top management parasites got fat now it's time for a diet. As the old Italians say "Seven years feast, seven years famine.
I don't think resort fees and "overpriced" rooms is going away. Prices may go down in the short term but long term those of us who can afford it, and choose to stay there, will continue to do so. I find it worthwhile to spend $400 a night (including fees/taxes) to stay where I want to stay on the strip. I spend much more in other cities like Hawaii (where they also charge resort fees). If you prefer lower end places with no resort fees that's great for you. A lot of people like those places too and they'll keep the light on for you!
We can start with your line below about the board owning the company. Some board members will have large holdings, which is how they became board members. But the shareholders get to vote on the board membership. A lot of time its rubber stamped. But if the shareholders, especially the big ones, are unhappy, they can oust and replace board members.
The relevance of any particular set of customers to a property is directly related to how profitable they are to the property. If particular set of customers isn't profitable enough to the casino, they'll make them more profitable by charging them more, one way or another. When they do this, the casino marketing departments research how this will effect patronage. They get a good read on how many will pay vs how many will walk. They're good at this. It's their job. And by results, it appears that they're right. And this pisses you off.
Everything's gone temporarily. But this is an externality. The conventions will be back. The people who don't care what they spend will be back.
Barring violation of charter or something legal, a shareholder vote can only oust a board member if the board does not hold a controlling interest or if the board members themselves also want a certain member gone. In practice this never happens. The hedge funds, management companies, banks, CEOs, and any other large investors are nearly always in kahootz and almost certainly will own a controlling interest, collectively.
You're saying whales have a separate line item on the P&L statement? I'd like to see that. In fact, I'm willing to bet the whales don't actually bring in the majority of the revenue, although they are certainly a boon to the property when they visit.
Does high touch clientele receive a higher level of service? They certainly do. Do they pay for that? Yes they do.
I think it's less about profit margins and more about the expectations of certain classes of clientele. The casinos want to curry favor with the whales because they can be influential in getting other traffic, like conventions, into the casino - not that they're particularly lucrative themselves. They're certainly more lucrative than the average player, but in the wider scope they probably only make up a small fraction of total revenues for any given quarter.
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