- May 22, 2008
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They (hotels) are also having to get with the profit reality that we live with.You know, I just got an email yesterday for $22 rooms at the excalibur in vegas... I think people just assume that we all can offer rooms at these ridiculous rates, not taking into account that a) they don't have a mrtgage, b) they have what, a thousand rooms? and c) that it's the gambling at the casino that is really paying for the rooms! Same reason Allegiant can offer flights for dirt cheap, it's casino money, not airfare money, they are owned by the casinos....
We offer specials, but we aren't going to go any lower, and we turn people away, oh well! A hotel here in town opened last year and were charging $200 a night and getting it, now they are down to $79 bucks, ($99 rooms on mother's day that included a full high tea!) We can't compete with that, they aren't happy about their low rate now, but honestly, they should have stuck to their guns!
There are days I've kicked myself for just offering specials, return guests get it stuck in their head and think that is our regular rate and get ticked when you don't offer the room at the lowball rate. Now we do offer special rates for our returns, but we aren't going to play the game... We had some european tourists show up at the door in the middle of a wedding last weekend, I didn't have a room ready but offered to get it ready (our best room, which was just being used as a dressing room) just as soon as the wedding was over, if they could go to dinner and come back in an hour and offered a 15% discount. They hemmed and hawed and asked me to give them 30% off. I thought, you know what, I'm not going to bust my butt for you to have the room and then give the room away, all while you tell me it's not worth it... They walked and I still have my dignity and didn't have to clean that room on top of cleaning up after the wedding...
I got the better deal..a) No mortgage?!?!? MGM Mirage (owner of Excalibur) has billions in debt and was close (and still is) to defaulting on some loans.Willowpondgj said:a) they don't have a mrtgage, b) they have what, a thousand rooms? and c) that it's the gambling at the casino that is really paying for the rooms!
c) It's not the gambling that is paying for the rooms. In a hotel/casino the hotel is totally different from the casino. They don't mix together and if the casino wants to put up a player for the night they pay the hotel for the room. Revenue at the end is obviously brought together but for the most part, especially today, the hotels are running on razor thin margins, some even losing money.
They're not charging $22 a night because they want to, it's because that's what the market there dictates. The MGM alone has over 5000 rooms, Excalibur 4000, Wynn and Encore around 5000 (already up to 14000 with only 3 resorts accounted for!) So as you can see it's simply supply and demand. There's a massive amount of supply and not very much demand. I could get a room tonight in downtown LV for $12 a night.
Back in the 80s & early 90s I worked night audit at an HI. I had authority to "make a deal" to get heads in the beds. Not wanting to give away the store I asked what was "break eve" and was told $18. The rack rate for a Standard was $60.(as I told the clerks - the more the hotel makes the better your chances of getting a raise. I could not get a raise as I was already over max in salary when they hired me.)
OK, the guest is now being charged $22 so the Casino is subsidizing say even another $22. Big whoop! The guest will probably lose that much in the first hour. Even if the hotel break even has doubled since "my day", they would be break even at $36.
In an article in the Chicago paper last week about a man who closed his hot dog stand and retired at 100 - a retirement that lasted 2 weeks and now he is a greeter and visits all 5 restaurants owned by his employer. His new employer was interviewed. When asked why his restaurants are sucessful, he said because I give them good food. Other restaurants use margarine that costs 1.50 and I use butter that costs 2.50 but adds 1 penny to my costs. Why would I not use butter for a penny?