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The Hotel Business Model Today Michael Dominguez Senior Vice President, Sales MGM Resorts International. Where Are We Today. Demand is Back. Revpar Back To 2007 Levels. Group Still Catching Up. What Demand Looks Like. Record Nights. Days Of The Week. What Days Are Driving ADR. - PowerPoint PPT Presentation
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The Hotel Business Model Today
Michael DominguezSenior Vice President, SalesMGM Resorts International
Where Are We Today
Demand is Back
Revpar Back To 2007 Levels
Group Still Catching Up
What Demand Looks Like
Record Nights
Days Of The Week
What Days Are Driving ADR
Non Group Leads
But…At A Value
ADR Growth In Group Hotels
Transient Premium Returns
2014 Forecast By Scale
Industry Takeaways
Supply Growth – Very Slow
Demand Growth – Healthy – Despite Everything
ADR – Will Drive Revpar Recovery
Steady As She Goes
Economic Headwinds
Employment A Continued Drag
Fuel Cost Impacts Meetings
5 Year Crude Oil
Peaked at $222 – March
2012
45% Increase
Airlines Still Front And Center
LET’S MAKE A DEAL
Washington Focus
Corporations Remain Strong
How Is A Hotel Built?
43.4%41.2%
15.3%
Overall Revenue
RoomsF & BOther
Direct Cost
Rooms – 75% Lost Profit Figure F&B – Highest Direct Cost Center
Other – Smallest Profitability
22%
57%
21%
Direct Departmental Costs
RoomsF & BOther Operating
Commodity Pricing
Beef Prices
53% Increase
Poultry Price
20% Increase
Salmon Price
50% Increase
Shrimp Price
82% Increase
Coffee 5 Year - Price
Peaked at $302
Coffee 10 Year - Price
106% Increase
Price Of Cotton
Cotton Prices
43% Increase
Income Before Debt
Debt Expenses
Elevate The Dialogue
F&B Revue Per Occupied Group Rom (RPOGR)
Revenue Per Occupied Group Room
$20,000 F&B
200 Room Nights
$100 POGR
$20,000 Food &
Beverage Spend
200 Total Room Nights
Revenue Per Occupied Group Room
Your Expected
F&B Contributio
n Per Group
Room Night
$100
Hotels Expected
F&B Contributio
n Per Group Room Night
$150
You have less leverage with rate and concessions
Revenue Per Occupied Group Room
Your Expected
F&B Contributio
n Per Group
Room Night$200
Hotels Expected
F&B Contributio
n Per Group Room Night$150
You have a ton of leverage with rate and concessions
Circuits$25k - $30K
Signal$25k - $35K
25% to 35%
50% to 80%
80% to 100%
ITEMS TO NEGOTIATE
Comp Policy
• Impact on Average Rate
Staff Rooms
• Impact on Average Rate
Gratuities
• Staff Impact
Meeting Rooms
• 24 Hour Holds
Labor is the #1 Cost in a Hotel/Resort
Separate locations for Reception/Dinner Outdoor Spaces run more labor typically Turning rooms (Labor Intensive) Good Information (Manifest/Arrival
Times) Turndown Service (VIP only) Smaller Groups using Restaurant for
Meals Roll-in Buffets
Negotiation Considerations
