Vegas Just Got More Expensive
MGM Resorts International announced today that they will begin charging for parking at most of their Las Vegas Strip hotels beginning in the 2nd quarter. This move has been rumored for months, but came as a surprise to some since it goes against a tradition of free parking that dates back to the city’s origins.
Of course MGM didn’t actually just come out and say what they are doing, but instead buried the news in a press release titled, “MGM Resorts International To Enhance Guest Parking Experience With New Parking Facility, New Technology Amenities And Upgrades To Existing Facilities” (And Your Going to Pay For It!) Ok, that last part is mine.
In the press release (which is artfully written) they slipped in the following statement, “The strategy includes the implementation of a parking fee program that will introduce a modest fee for customers utilizing valet services or self-park facilities.” A “parking fee program” eh? Well what will it cost? They aren’t specific, but they do say an overnight guest will pay “$10 or less”.
As part of this set of changes, MGM Resort International will do the following:
- Redesign parking facility layouts to improve accessibility
- Install parking guidance systems that will guide guests to available spaces
- Utilize mobile technology to allow visitors to check space availability prior to arrival
- Upgrade lighting, LED signage, paint and striping
- Enhance and upgrade elevators and escalators
- Build a new $54 million 3,000 space lot on the Northwest corner of the Excalibur property
Some of MGM’s parking garages are definitely old and in need of upgrades. The lot at the MGM Grand is terribly dated for example. These changes no doubt have been brought on by the new T-Mobile Arena (Formerly known as Las Vegas Arena) that will be opening in April. Despite saying for months that there are enough spaces, today’s news seems to be an admission that this simply isn’t true.
Resort Fees All Over Again
Following the beginning of the Great Recession, room rates in Las Vegas hit shocking lows. During that time the casinos adopted a strategy popular in other heavily tourist frequented areas. They began charging resort fees to boost revenues. At the time they pointed to the fact that this practice was a norm in the industry. Guess what they said in today’s press release?
We recognize this is a significant departure from a long-established paradigm in the Las Vegas market. However, after months of analysis, we believe these enhancements and new technology solutions will become welcome additions to our overall guest experience.
…fee parking is a standard practice for hotels, resorts and entertainment facilities across the country, especially those in comparable high-demand tourist and convention destinations, such as New York, Los Angeles and Orlando.
Will Others Follow?
It took a couple of years, but after MGM Resorts put pressure on the Vegas hotel market with their resort fees (their rates seemed lower), nearly every company followed. Even Caesar’s Entertainment who once had an entire advertising campaign designed around not charging resort fees caved. I fear the same thing may be happening in Vegas and that is bad for everyone.
The truth is that there are hundreds (maybe even thousands) of empty parking spots in each of MGM’s properties on almost a nightly basis. In fact, they basically said that when asked if they would have enough spots for the arena. So why do they have to charge for parking on non-event days? Simple, because they want to make more money. Sure they may use this money to “enhance” parking in the short term, but changing the “free parking paradigm” in the long terms means serious cash.
How to Avoid the Fees
As part of the press release MGM announced that locals will have a grace period once the changes go into effect and that both locals and tourists will be able to avoid parking charges by enrolling and “earning privileges” in the M Life loyalty program. Exactly which level of status will be required wasn’t announced, but hopefully you Hyatt elites will be spared.
I wholeheartedly disagree with MGM’s decision to charge for parking and believe it is a bad move for customers. While I think charging for parking on event days would be perfectly fine, implementing a charge all of the time really exposes their true intentions in my opinion. Yes it will be nice to have a new garage and upgraded facilities, but the end result is a negative.
Of course MGM does own these properties and thus has the right to do what they want. In the end the free market will decide. Let’s hope that they see a traffic drop off and return to the days of free parking, but my guess is that won’t happen. Caesar’s is in financial trouble and is likely to follow suit in their search of new desperately needed revenue. Or maybe they’ll just create a free parking ad campaign before reversing course like they did with resort fees.
What do you think? Is this a savvy business move by MGM Resorts International or one that will cost them? Do you think they will be successful in shifting the paradigm in Vegas away from free parking? Let me know in the comments!