SAN ANTONIO – Economic signals are strong for the U.S. travel industry, an executive at a leading hotel resort company told attendees at the opening breakfast for UMA Motorcoach Expo 2018.
“We are occupying almost 66 percent of all hotel rooms in the United States. We have never done that in history, ever,” said Michael Dominguez, chief sales officer for Las Vegas-based MGM Resorts International, reporting four consecutive years of strength in key hotel metrics and rooms not being built fast enough to satisfy demand.
International travelers, older millennials ages 28 to 35 and baby boomers with retirement incomes from 401(k)s they have to draw from starting at 70 are fueling the surge and they’re hungry for experiences, Dominguez said of trends also dovetailing with healthy economic conditions.
The hotel industry’s best recovery ever, which produced 111 consecutive months of room revenue growth in the 1990s, appears set to fall, he said.
“We’re only 88 months into the cycle right now,” Dominguez said of the post-recession recovery, which means the industry could go another couple years before hitting the record.”
But no business should rest on its laurels because the world’s evolving at a relentless, technology-driven pace that is forcing companies into Darwinian adaptation to survive.
The world will continue to change at a pace not seen before, he noted.
“Any business plan we have today that is looking further than three years out, it’s called a wish, it’s called a hope, it is not a plan,” he said, adding that goals may stretch five years.
Highlighting the disruptive forces shaking industries, he pointed to Amazon’s rattling of the retail industry and, most recently, the food industry with its purchase of Whole Foods Market Inc. and changes coming there.
“Here’s the thing that should keep all of us up at night and keep us charging forward to know that we need to change and we need to move faster: Amazon has openly said they may not make a lot of money at groceries and nor do they care,” he said. “The reason they got Whole Foods … there’s only a 30 percent overlap between a Whole Foods shopper and a (Amazon) Prime member,” providing an opportunity to grow its Prime membership and core business.
“What happens when they decide to buy a hotel company that doesn’t have to make money, because of a loyalty program and the opportunity to grow Prime memberships?” he said. “What happens when they decide to buy a motorcoach company and it has nothing to do with making money, it has to do with automating and experience, making it better and candidly, finding a new audience for Prime membership?”
While the amount of money being spent on travel is a “hockey stick” angling upward with people feeling travel is their right, the world is a more open and connected place than 20 years ago, he said. People who live in the U.S. aren’t limited to the U.S. for travel.
“There is so much competition for our business that you need to move faster,” Dominguez said. “You need to move smarter because there are options and people want to go experience things. How do you make it special and how do you make that experience special?”
The meetings and convention industry, like others, faces disruption, including from the eSports market segment drawing legions of video gamers worldwide to mass competitions in arenas and other large venues.
“ESports is probably the fastest-growing segment of the meetings industry right now,” Dominguez said, adding it will be a $5 billion industry by 2020, possibly an Olympic sport by 2024 and is already a team sport, like football or basketball, at a couple universities. “Most people don’t even realize these are some of the biggest meetings we are hosting today.”
And throw away assumptions they’re all teens, he said. The largest audience playing games is 34 to 44, with females the largest growing segment.
“It’s crazy, it really is,” he said. “We have these in our arenas, we have them in ballrooms, and they bring in anywhere from 5,000 to 15,000, depending on the event, every time, so if I’m in your seats, I don’t know how all these people are traveling here. There are opportunities to start understanding eSports, how big it is and how fast it’s growing. It is a tremendous opportunity, tremendous growth opportunity in all segments of our business.”
Consumers also have come to expect customization, choosing from myriad products and services to suit their tastes, Dominguez said.
“Every business model has to change today or you’re going to be irrelevant in the next few years,” he said.