Why The Hyatt-MGM Deal Is Only The Beginning In Las Vegas

In case you haven’t heard yet, Hyatt and MGM Resorts just announced a rather significant partnership. You can read the announcement and press release on the Hyatt website here. A number of other bloggers have weighed in on this, so I’m not going to rehash all those details. To cut to the chase, as of June 20th you’ll be able to earn and redeem Hyatt Gold Passport points at 12 MGM properties in Las Vegas. This includes places like the Bellagio, Aria, MGM Grand, Mandalay Bay, and many more.

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It’s a huge win for Hyatt and Hyatt fans, as their coverage in Las Vegas was really bad prior to inking this deal. This isn’t the first move they’ve tried to make in Las Vegas either. The Cosmopolitan (where I stayed during my trip to Vegas earlier this year), was originally supposed to open as a Grand Hyatt before things fell through. Hilton and Starwood also gave it a go, but the hotel ended up opening in 2010 as part of Marriott’s Autograph Collection. It was a much-needed lift for Marriott, as their presence on The Strip was pretty piss poor at that point as well.

The Cosmopolitan of Las Vegas, a Marriott Autograph Collection Hotel

The Cosmopolitan of Las Vegas, a Marriott Autograph Collection Hotel

It must’ve stung especially bad for Starwood, who had just lost their presence on The Strip earlier that same year (Planet Hollywood left the Starwood program in January of 2010). Starwood does have hotels in Las Vegas, but they haven’t had any on The Strip for the past 3 and a half years.

Earlier this year, Hilton reestablished itself on The Strip via a franchising deal with the Tropicana. Jamison from Points Summary stayed there a few months ago – be sure to check out his trip report here. That makes Starwood the only one of the major hotel groups without a date to the dance, as IHG is affiliated with The Venetian and the Palazzo.

In some ways then, this Hyatt-MGM deal represents the peak of the major hotel chains establishing themselves in Las Vegas. However, I think things are only just beginning and here’s why:

The economy is (slowly) moving in the right direction

When things tanked a few years ago, Las Vegas was hit particularly hard and the casinos took a real beating. Financing and the risk of foreclosure is what tripped up the original plans for The Cosmopolitan, but plenty of other places were struggling as well.

Things are moving in the right direction again (slowly and cautiously, mind you), and development is starting to pick back up again. Las Vegas doesn’t look as unattractive as it did during the depths of the recession; some might even say it’s an attractive opportunity for investment. With Hyatt making a big splash, you can bet the other major chains will want their own piece of the action because…

No one likes losing to the little guy

Hyatt is the smallest of the major chains, followed by Starwood (the others are multiple times bigger, in terms of the number of properties under management). For quite some time, they’ve all been on more or less even footing in Las Vegas though – with each chain dabbling with one or two properties from time to time. Now that Hyatt has taken a big plunge, leapfrogging everyone else by an order of magnitude, it’s only a matter of time before the competition scrambles to play catch up. Fortunately for them…

There are other potentially attractive partnerships to be had

MGM owns more casinos than any other group in Las Vegas, but there are still plenty of other options to be had. The Caesar’s / Harrah’s group is the other big player in town (including such casinos as Caesar’s Palace, Harrah’s, Bally’s, Paris, Rio, and more), but there are also the Wynn properties (Wynn and Encore), and a handful of others as well.

So now what? Unfortunately, we’ll have to wait and see – I haven’t heard any other rumors about potential partnerships or acquisitions. Starwood’s Crossover Rewards with Delta has shown that they’re willing to get creative, and I’d love to see them sort something out and get back in the game. They’re also in the worst shape in terms of their presence on The Strip right now, so are probably the most anxious to make some sort of move. Here’s hoping!

What do you think about the recent developments in Las Vegas hotels? Do you have any predictions about how things are going to work out for Hyatt and MGM, or which major chain is going to be the next one to make a major move?

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