Internet travel could aid business in LV

David Strow

Thursday, Feb. 10, 2000 | 10:59 a.m.

The booming business of booking travel on the Internet presents new opportunities to drive more business to Las Vegas, a group of top industry executives said Wednesday.

By some estimates, the Internet travel business could reach $30 billion by 2003. Jason Ader, senior managing director of Bear Stearns, said much of that business is now leisure-oriented travel.

"It's logical that (online customers) will pursue top leisure markets, such as Las Vegas or Orlando," Ader said.

Through the use of new technology, the companies emerging as leaders in this space say they can target advertising and marketing better than any travel agent. A panel of executives from these companies spoke Wednesday at the American Gaming Lodging & Leisure Summit.

One example is fast Internet technology. Once this becomes more widespread, Internet travel sites will be able to deliver crisp video images of vacation spots. That could be a hook for Las Vegas, said Terrell Jones, president of Travelocity.com, a leading online travel site.

"As broadband comes online ... I think we have the vehicle to tell the Las Vegas story in a dramatic way," Jones said. "Here's another way to get the word out ... that this has become quite a different place."

Richard Barton, chief executive of Expedia.com -- the company that recently acquired Las Vegas-based Travelscape.com for $95 million -- noted that Internet travel sites have the ability to target sales pitches far more effectively than any travel agent. In one case, he said, Expedia was contacted by a hotel in Cancun trying to fill its rooms. Expedia went through its database, found 50,000 visitors had recently searched for information on Cancun, and sent an e-mail out to each of them.

"Within two days, that hotel was full," Barton said.

"We know exactly who our customers are, what they want. It is up to us to use that information."

By sending out targeted e-mails -- Expedia sends 7 million a week -- the company is able to get the attention of customers who weren't actively considering travel, but may decide to take an impulse trip if the price is right.

But it's a tool that has to be used with care, he said.

"We're highly sensitive to the spam issue," Barton said. "So we've taken a very conservative approach to it to date."

One particular business challenge for these sites is getting visitors to actually book tickets on the Internet. Out of 4 million unique visitors, only 3.8 percent actually purchased a ticket through the site, Barton said.

"We probably influenced the travel plans of 10 times that amount," Barton said.

That may lead to changes in the way such sites make money, particularly as sales commissions continue to fall, said Gary Goldberg, vice president of product development at Priceline.com.

"I really do believe there will be an opportunity for these sites to have service-oriented fees," Goldberg said. "I do think you'll start to see consumers paying for that, even if they don't make their ultimate purchases there.

"If the customer can make a more informed choice .. they will be willing to pay more for that information."

A second emerging Internet industry discussed Wednesday was online gaming. Panelists discussing this industry appealed to Nevada's gaming industry to become more involved in this industry's development, warning that an opportunity may be slipping away.

"Ten years from now, business schools will teach how Nevada gaming companies lost the Internet market to these small companies," said Sebastian Sinclair, vice president of Christiansen Capital Advisers, a Maine-based firm advising Internet gaming companies. "In three years, it will be too late."

Nevada regulators have repeatedly expressed distaste for Internet gaming, saying it cannot be properly regulated.

Those in the industry dispute that, saying that Internet gaming has been sanctioned by such countries as Britain and Australia -- and that gaming over a computer can be far more closely tracked than many traditional games.

"This industry is very regulated. It is more regulated than a table game out there on the (casino) floor," Sinclair said.

Sue Schneider, chair of the Interactive Gaming Council, suggested the industry could be regulated effectively at the local level, much as "bricks and mortar" casinos are now. She likened the struggles of Internet casinos to those experienced by the early pioneers of Las Vegas, as they struggled to gain legitimacy.

"If you look at the genesis of Las Vegas ... that's the exact same thing that's going on on the Internet," Schneider said.

When Schneider began following the industry in 1996, only a dozen Internet gaming sites were in operation. Now, she said, there are more than 700, and 55 countries across the globe now permit it in some form.

"If you don't see a chance in the attitude of Nevada ... you will see companies pouring so much money into the Internet that they will become the dominant (gaming) brands on the Internet," Schneider said.

Several executives said the casino companies of Las Vegas have the power to quickly stake a claim on the market before that happens. Richard Iamunno, chief executive of Online Entertainment Systems Ltd., said these companies could cause Internet gaming to explode.

"They have the players," Iamunno said. "When they start bringing the players to the sites, that's when the dollars will start coming in."

Joseph Paravia, chief executive of Virtgame.com Corp., said the real power of the casinos lies in such powerful brand names as Harrah's and Mirage. Virtgame.com recently announced plans to develop an intranet-based wagering system with Coast Resorts Inc., which could be accessed only by Nevada residents.

"I don't believe you'll see $1 billion buildings turning to dust in three years," Paravia said. "Once these companies come on the Internet, these names (the existing online casinos) will disappear."

But Robert Fell, chief executive of Los Angeles Internet wagering firm Youbet.com Inc., disputed that. He argued that the Internet has proven that traditional brand names can lose their power quickly.

"That same statement could have been made by Barnes & Noble when amazon.com was launched," Fell said.