Internet bookings growing for hotels

Kevin Ferguson

Thursday, July 26, 2001 | 11:05 a.m.

Las Vegas hotel operators apparently believe the tech-savvy customer is not a niche to be ignored as local resorts step up promotions for discounted rooms, show tickets and other deals through their Internet websites.

Meanwhile, discounted hotel-airline packages available through online travel wholesalers are also helping hotel e-bookings to become one of the fastest growing segments of Internet travel, analysts say.

U.S. hotels will do $2.7 billion in online bookings from leisure travelers this year, which is a 42 percent increase from 2000, said Henry Harteveldt, an analyst for Cambridge, Mass.-based Forrester Research.

"The high growth in hotel bookings is due to the discount hotel packages being offered through companies like Expedia and Travelscape," said Harteveldt.

Bellevue, Wash.-based Expedia owns Las Vegas-based Travelscape.com.

Sites like these purchase a block of hotel rooms at negotiated prices and resell them, often in a packaged deal that may include a car rental, show tickets or other entertainment deals.

"We're able to get really good deals with the hotels we deal with on a regular basis," Travelscape President Tom Breitling said.

"In New York, for example, there may be several hundred hotels, but there's maybe 75 we deal with regularly, and we try to drive traffic to those properties."

Some Las Vegas hotel operators, like Mandalay Resort Group and the Venetian, are trying to drive more traffic and hotel bookings through their individual websites rather than using online wholesale companies.

"It's less expensive for us to have guests book rooms from our site than from other sites, because it allows us to avoid paying GDS (Global Distribution System) fees or travel agent commission fees," said Chris Stacey, Venetian Internet marketing manager.

Stacey said 50 percent of Venetian rooms are earmarked for conventioneers, Of the room inventory that is available for "free and independent travelers," about 5 percent are booked through Venetian.com.

At the site, Venetian Player Club members can access their account information. By typing in their access code, club members can view what special deals are available based on the level of casino credits they have accumulated at the property.

John Marz, senior vice president of marketing for Mandalay Resort Group, said two of his company's properties -- Mandalay Bay and the Luxor -- fill between 11 percent and 13 percent of their hotel rooms available for free and independent travelers through their websites.

Marc Falcone, who tracks the casino industry for investment banking firm Bear Sterns, said MGM MIRAGE is filling about 11 percent of its rooms via e-bookings, and about 8 percent of Park Place Entertainment rooms are booked online.

"As we are seeing with the success of Expedia and (Fort Worth, Texas-based) Travelocity, it's clear that travel is something people are comfortable purchasing online," Falcone said.

On the Las Vegas Strip, MGM MIRAGE operates the MGM Grand, New York-New York, the Mirage, Treasure Island and Bellagio hotel-casinos.

Park Place operates four properties on Las Vegas Boulevard near Flamingo Road, the busiest corner on the Strip. They are Caesars Palace, Bally's, Paris-Las Vegas and the Flamingo. It also has the Las Vegas Hilton.

Harteveldt said its important that hotels do not ignore the wired customer because 60 percent of U.S. households have access to the Internet.

"If I was a hotel owner, I would not want to be shut out from that market," Harteveldt said.

While hotel e-bookings are growing, the hotel industry has a ways to go before catching up to the airline industry, which Forrester estimates will generate $11.1 billion in online ticket sales in 2001.

Harteveldt said the hotel industry has lagged behind its airline counterparts in e-bookings for several reasons. For one, the hotel industry is less consolidated. Therefore, it's more costly for independent hotels to develop and market their websites with e-commerce features.

Secondly, "the hotel industry has done a terrible job (on the web) at explaining things, like what is a deluxe room or a standard room," Harteveldt said. "In the airline industry, everybody knows what's an economy class or first class."

Mandalay's Marz said his company limits the types of hotel rooms it offers on its websites for that purpose.

Casino industry analysts say Las Vegas hotels are anticipating a much larger pay day indirectly resulting from the growth of cyber hotel bookings: a database full customers that could become cyber-gamblers if gaming regulators permit Internet gambling in the future.

The Nevada Legislature this session passed a bill that paves the way for legalized Internet gambling.