Leveling the Field

Vegas companies adopt ‘Best Rate’ policy in effort to reclaim the Internet

By: Kathy Espin

LAS VEGAS Following a trend among national hotel chains, two Las Vegas resort companies and one independent hotel are making moves to reclaim control of room inventory and pricing by guaranteeing that the lowest room rates available can be found on the company Web sites.

In March, Caesars Entertainment has announced a “Best Rate Plus Guarantee” program that says, in essence, if a customer or a travel agent finds a lower rate for one of the company’s resorts with any third-party Internet provider, Caesars will match the lower rate and discount it by 25 percent. Restrictions, of course, apply. The lower competing rate must be found within 24 hours, and the request for the discount makes a college application look simple, but that’s not really the point. Nor is the fact that the commission will be paid on the lower rate.

The point is that travel agents now have access to the best rates available for commissionable sales, putting agents on equal footing with Internet providers. “What it does is give the travel agents the same advantage as some of the other third-party providers,” said Steve Rosen, senior vice president of marketing with Caesars Entertainment. “What we have done is said that we are all going to start with the same base price. The travel agents can feel comfortable that their customers are not going to come back with a lower rate they found someplace else. It puts the travel agent on the same playing field as the third-party providers.”

The guarantee applies to all Caesars Entertainment’s domestic properties, Rosen said. Caesars operates eight resorts in Nevada, three in New Jersey, five in Mississippi and one each in Indiana and Louisiana.

Mandalay Bay Resorts is also guaranteeing that the lowest rates available can be found on the various Web sites for each of the company’s resorts, but company spokespersons were not forthcoming with details. A room reservations clerk at Mandalay Bay had to ask a supervisor about the guarantee and still had few details except to say that the offer did not apply to rates available through “major wholesalers.”

Hotel San Remo, a smaller, off-strip property, is also offering to beat rates from other providers. Although a spokesperson said the guarantee is not available to travel agents, the bigger picture might matter more to agents in the long run. According to Richard Copland, president of the American Society of Travel Agents, the fact that the resort companies are taking control of inventory and pricing brings smaller travel agencies back into the game.

“The hardest thing in the marketplace is when suppliers give different people different deals,” he said. “What this is going to do is it’s going to give the sellers of travel much more confidence in selling the product. This way, if I put a lot of time and energy putting together a package for 50 or 100 people, I don’t have to worry they are going to come back at me and say they found the same thing at a lower price someplace else.” Caesars’ Rosen said other Las Vegas companies would more than likely make similar offers in the near future.

“This is a ‘Me Too’ industry. If it makes good business sense, you will start seeing more and more of this. It’s good for everybody. It helps the suppliers and it really helps the travel agent and the consumer,” he said.

It makes sense too that anything that undermines the power of the Internet providers will help bring customers back to travel agencies, Copland said.

“They [third-party providers] like to think they’ve got the cheapest rates,” he said. “This will water down their ability to cut out people who don’t have as much clout in the marketplace. This gives the smaller operator a level playing field.”

Not everyone agrees that the move against the Internet providers will have a big impact on the travel agent business. Tammy Lee, vice president of corporate affairs with Mark Travel, said that consumers who are cost-conscious aren’t calling travel agents anyway. “The really good travel agents are providing customer service and value the Internet can’t provide,” Lee said. “The customers who call to book Las Vegas through a travel agent are looking for that higher level of service, they aren’t looking for price.”

She pointed out that few agents focus on selling Las Vegas because room prices and commissions are already low, but Rosen says that is changing.

The price point for Las Vegas rooms is rising as the quality of the products offered goes up. Caesars is opening a new 949-room luxury high-rise tower in 2005 and Wynn Las Vegas will open with an inventory of 2,700 high-end rooms at about the same time. “It’s going to be pretty interesting to see what happens in the next six months to a year,” Rosen said.

Room rates in Las Vegas have been rising for some time and will continue to do so as long as demand rises to match the increase in inventory, Rosen said. With the resorts moving to take control of inventory, agents have another tool to serve high-end clients.