3-Part Series

1.Big Box Integrated Resort insights (Jack Easdale, Venetian|Palazzo)

2.High-End Boutique insights (Nicole Young, SBE)

3.Demographic/Psychographic insights (Angie Dobney, Rainmaker)

2

Transcending Optimization

Integrated Resorts Insights

• Venetian and Palazzo Las Vegas

7,100 Rooms

2.3 million sq.ft. of meeting space

38 Restaurants

250,000 sq.ft. Casino

3 Theatres

2 Night clubs, 1 Day club

3

LOTS to

Optimize!

Integrated Resorts Insights Minneapolis 2006

Orlando 2007

Austin 2008

Anaheim 2009

Orlando 2010

Austin 2011

Baltimore 2012

Minneapolis 2013

Los Angeles 2014

Austin 2015

4

This is my 10th

HSMAI ROC

Conference,

and the

feedback in the

survey is the

same every

year….

“Give me

something I

can take

back to my

hotel AND

USE”

Integrated Resorts Insights

5

Revenue

Management in

1997 defined as

“Selling the right

PRODUCT to the

right CUSTOMER at

the right TIME for

the right PRICE”

________________

In 2015 is there

more to this

definition?

Integrated Resorts Insights

• I’ll argue there IS more to the definition

• Selling the right PRODUCT to the right

CUSTOMER at the right TIME for the right

PRICE…at the right COST!

6

Integrated Resorts Insights

• Vegas hotels routinely run 90-95% months selling out

most nights

• Vegas hotels have numerous nights with $500-$1,000

standard room rates market-wide (NYE, CES, Fight

Weekends, Memorial Day, Electric Daisy Carnival, AAPEX, etc.)

• When demand exceeds supply, raise rates right?

• When demand exceeds supply, optimize market mix to

favor higher margin segments right?

• But do you REALLY know what’s optimal?

7

Integrated Resorts Insights • To truly optimize the PROFIT for your owners and

shareholders, you need to unequivocally understand two

sides of the equation:

1. The Marginal REVENUE associated with selling the next

room, per segment

2. The Marginal EXPENSE associated with selling the next

room, per segment

8

Integrated Resorts Insights

• Nobody in your property or company understands Room

Revenue like you do. Nobody.

• If you’ve completed an in-depth distribution channel

analysis for your property or company, nobody

understands directly attributable Distribution Costs like

you do.

9

Integrated Resorts Insights

10

Two fantastic resources on Distribution. GET THEM!

Integrates Resorts Insights

• Revenues Per Room – Room Revenue ($237)

– F&B Revenue ($40)

– Meeting Room Rental ($17)

– Casino Theo ($25)

– Retail Revenue ($10)

– Resort Fee Revenue ($21)

• Total Revenue Per Guest is $350

11

Integrates Resorts Insights

• Expenses Per Room – Rooms Expense ($55)* Includes Sales, Mktg, & Distro costs

– F&B Expense ($30)

– Meeting Room Expense ($6)

– Casino Expenses ($10)

– Retail Expenses ($8)

– Resort Fee Expenses ($6)

• Total Expense Per Guest is $115

12

Integrated Resorts Insights

• In this simple generic example…

Revenues per Room $350

Expenses per Room $115

EBITDA per Room $235

13

P and L by Market Segment

• Now here where it becomes interesting

• Now here’s where it becomes cumbersome

• Now here’s where you buy your Controller a beer, because he/she’s

going to be your new best friend

• Now here’s where you provide REAL value to your organization by

making optimal decisions

14

Methodology • Acquisition

• Allocation

• Assumption

15

Data is already available – Go get it

16

Data Acquisition – Required data

• Room Data – Revenues AND Expenses – Room nights and revenue by market segment

– Include any resort fees, forfeit deposits, upgrades, etc.

• Ancillary Data – Revenues AND Expenses – Entertainment, meeting space rental, F&B including room service and restaurants, entertainment, retail,

etc.

• Cost per Occupied Room – Expense – This should already be defined by the Controller

Historical P&Ls are vital for this process – This data should be available via the Controller

Revenue (at a minimum) must be captured by group code to allow market segment association

Expenses can later be allocated with some base assumptions

17

Allocation

– Allocation is the tricky part and will demand some

one on one time with department leaders

• i.e. Sales Directors will be your best friend….

Two primary items must be defined for each expense per segment: % of expenses to segment AND distribution of said expenses within each segment

Some specific expenses will be impossible to break into % allocations, assumptions will be used to fill the gaps (Next Slide)

ExpenseExpense Category

Summary

Electronic Channel

PortionGDS% OTA% IHG% Sales Corporate Tradeshow Wholesale

TOTAL PAYROLL EXPENSES Departmental Expense 15% 30% 100%

80150 - COMMISSIONS Z Do Not Use Commission 50% 100% 50% 60% 30% 10%

80180 - CONTRACT LABOR Departmental Expense 30% 33% 33% 33% 50% 33% 33% 33%

80185 - COMP-ON PROPERTY Departmental Expense 40% 12% 88% 40% 12% 88%

80210 - DUES,MEM, & SUBS Departmental Expense 50% 100% 50% 50% 50%

Clearly define the segments: Sales, Wholesale, BAR, OTA, etc.

Expense

Line items

to

Allocate…

18

ExpenseExpense

Category Detail

80515 - RENT EXPENSE Operating Expense

TOTAL PAYROLL EXPENSES Payroll

60001X - COMPLIMENTARY ROOMS Complimentary

70205 - BONUS-OTHER Payroll

60010X - COMPLIMENTARY OTHER Complimentary

80185 - COMP-ON PROPERTY Operating Expense

60002X - COMPLIMENTARY FOOD Complimentary

80415-500 - OUTSIDE SERV-OTHER Operating Expense

80210 - DUES,MEM, & SUBS Operating Expense

80570 - TRAVEL/TRANS/LODGING Operating Expense

60003X - COMPLIMENTARY BEVERAGE Complimentary

80569-001 - TRAVEL-UNALLOCATED EXPENSE Operating Expense

90011-605 - SERVICE EXP-MBS Intercompany Expenses

80150 - COMMISSIONS Operating Expense

80390-010 - OPERATING SUPPLIES Operating Expense

80410 - COMP-OFF PROPERTY Operating Expense

80560-010 - TRAVEL MEALS Operating Expense

80180 - CONTRACT LABOR Operating Expense

80490 - PROMOTIONAL ITEMS Operating Expense

19

Potential Results

20

Potential Results – The Finale!

Profit POGR

Group$250

Wholesale

$205

FIT Direct$424

White Label$165

Loyalty$253

OTA

Standalone$206

OTA

Package$120

IHG$284

OTA Opaque

$118

Private Sale

$310

GDS$442

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

Group Wholesale FIT Direct White Label Loyalty OTAStandalone

OTA Package IHG OTA Opaque Private Sale GDS

21

Transcendent Revenue

Management

Introduce the Elephant:

Recognizing Limitations

22

• Time

• Technology

• Benchmarking

• Brand

• Guest Adoption

• Team

• ROI

23

DORM

GM’s

Sales &

Conference

Venue

Managers

Front

Line/Support

Staff

The Role of Revenue Management in

TRM Development

• Positioning Activities

– Appropriate for non-peak or low volume

– Is your offering and price optimal?

• SWOT

• Benchmarking tools

• Caution towards disrupting current demand

24

Building Sound Strategy

• Yielding Activities (peak)

– Identify demand & scarcity by venue/income

• Annual seasonality

• Day & week part

• Customer segment (resident vs. non-resident)

• Focus on high potential ROI and captivity rate

• Observation and data collection period

25

Back to the Basics

– Translate to the fundamentals

• ARI equivalent

• Purchase cycle (booking window)

• Establish baseline performance

• Create your KPI’s

• Data and informational requirements

26

Back to the Basics (cont.)

• Identify strategic team

• Methods of deployment - Tactics

– technology/system administration

– training and accountability

– frequency

• Define Success – goal setting

• Period of measurement

27

Executing the Plan

• Elective charges - value of assurance

• Don’t get “fixed” in old ways

• Develop special event revenue plans

28

Easy Ways to Get Started

• Honor your value proposition

• Don’t forget the guest!

– Periodic total trip cost model

– Bifurcated strategy for in-house & local guests

– Social listening, no news is good news

29

Check and Balance

My favorite quote this year!

30

Steve Wynn- 2014 G2E Keynote address

“It’s always been that the non-casino

story was the story. It was never the

slot machines– they’ve been

everywhere for centuries,” Wynn said.

“You got to give people something

they’re willing to get on an airplane

and submit to a body search for,” he

said. “That ain’t a slot machine,

friends, and it sure as hell ain’t a

baccarat table.”

Why focus on Total Revenue Management?

• Applying Revenue Management principles and best

practices: 3-5% increase in Room Revenue

• Applying profit-based total revenue management: 8-15%

lift in Total Profit.

• Providing a tool where your Sales manager can quickly

provide scientific optimized pricing: 11.4% increase in

conversion and a 8.2% increase in group revenue

31

Gaming vs. Non-gaming revenue

32

Non-Gaming Overnight Trip Budget

33

Non-Gaming Day Trip Budget

34

A look at what is ahead in spending patterns

• The focus is shifting to target Millennials and not

the Baby Boomers or Gen X.

• Millennials are reaching the age where they are

starting to have spending power. They are

starting to accumulate wealth.

35

How many Millennials are there?

36

72 Million Baby Boomers

50 Million Gen X'ers

81 Million Millennials

Population by Generation

Growth estimates

37

Skift says by 2020, Millennials

will be nearly half the

workforce. By 2030, they’re

predicted to outspend baby

boomers. And they are taking

that spending power and

putting it behind one of their

passions: Travel.

2015 Overnight Trips

Age Group Expected change %

Baby Boomers -1%

Gen X -6%

Millennials 10%

38

MMGY Portrait of American Travelers

Who are they? • They have grown up using technology. It was not

learned. They expect everything to be available all the

time.

• Content creators: 60% of the content out there. They will

leave reviews.

• Educated: they stayed in school during the recession

and earned higher degrees. They are the most

educated generation.

• Engaged: they want to share their experiences with

others.

39

Preferences • They would rather have a great experience

than buy something.

• Not as focused on your room product, but rather the

common areas.

• They enjoy being engaged in groups.

• They like to help people and support issues.

• They like to be healthy.

• They are authentic and crave inspiration and

personalization.

40

Change is happening!

• Almost all hotel companies are changing their look to

attract this new, young customer. Hotel lobbies are

becoming a portal to the local culture surrounding the

property.

• Food and Beverage menu items are changing

– Healthy offerings

– Craft cocktails & Microbrews

41

Has there been an impact on OTA’s?

• 60% of business is coming from meta search engines /

clicks

• 45% of millennial bookings are done via mobile

• OTA’s have launched or retailored brands to target

millennials (Cheaptickets, Hotels.com, etc;)

• Booking widow averages 10 days less with millennials;

rapid information and trained to book last minute

42

Millennial Travel Spend

• Millennials are willing to spend money on

travel, and the amount they’re spending is

increasing. They spent 20% more on trips in

2014 than the previous year.

• They are more likely to indulge in hotel

services such as food, beverage, dry

cleaning and spa treatments.

• They’re also more interested in pet-friendly

accommodations.

43

MMGY Portrait of American Travelers

Millennial Travel Spend

• Today Millennial travelers spend less than older people

on leisure trips: PhoCusWright says older travelers

spend an average of $3,381, while millennials spend

$3,217. But they’re not in their peak earning years yet,

so look for that number to grow.

44

45

Summary

• Taking the Total Revenue Management approach with

your RM strategy increases total profit.

• Millennials love to travel and spend money on these

ancillary revenues.

• Engage this generation thru your brand marketing and

with ancillary products that are profitable.