Will Hyatt’s New Multi-Brand Las Vegas Complex Jeopardize Its MGM Partnership?

The old Rio Las Vegas will become several Hyatt-branded properties with Hyatt Regency the first to come online, expected in 2023.

Full service Hyatts in Las Vegas will be something new, but Hyatt isn’t telling us what other brands they’ll have yet and none of this will happen for several years. So that’s only of limited interest today.

What’s more intriguing I think is what this means for Hyatt’s MGM M life Rewards partnership. There are currently a couple of Hyatt Place properties in the Las Vegas area but for the past 8 years the chain has effectively codeshared with MGM in the city.

Hyatt is making clear that this announcement “does not impact World of Hyatt’s existing strategic loyalty alliance with MGM” but it will be interesting to watch how this develops over time.

  • Hyatt has been able to earn revenue from its members’ stays in Vegas, even without a real Las Vegas footprint. It’s going to have its own Las Vegas footprint, albeit not as large and diversified as what MGM properties offer in Las Vegas.

  • MGM has been able to earn revenue from its members’ stays outside of Vegas since they’re so geographically concentrated. That’s something they’re going to want to see continue.


Credit: HoppingRabbit34 via Wikimedia Commons

MGM members gain status in Hyatt’s program and earn points towards their own M life status when staying at Hyatt properties, and Hyatt members gain status in MGM’s program and earn points and nights in their Hyatt account when staying at MGM properties.

That’s been a great arrangement for both, though the volumes in each direction aren’t public. There’s no reason why the announcement of competition in Las Vegas from Hyatt will put a stop on the relationship. But what happens when the Hyatt property is up and running?

The key here is going to be partnership volume, and that will determine what happens to the Hyatt-MGM relationship.

  • If Hyatt can draw volume away from MGM to its own hotels, and volume drops, then they don’t really need the relationship.

  • But Hyatt still won’t offer the diversified experiences that MGM does. They’ll want guests to stay at their own properties, but they’d still rather earn revenue off of a Hyatt member staying with MGM than when that Hyatt member goes outside the partnership entirely such as to Caesars or elsewhere.

  • If Hyatt’s properties aren’t filling at expected room rates there will be pressure not to incentivize World of Hyatt members to stay elsewhere through points and stay credit. There will be concern that the partnership cannibalized their own business.

    However the Rio project involves franchise agreements, not Hyatt property ownership or management. If a management agreement were in place I’d be concerned about minimum revenue guarantees Hyatt might have offered to win the deal. Failing to meet minimum revenue would mean financial penalties to the chain, and could put pressure on the partnership not to divert stays. It seems far less likely that a franchise agreement would create that kind of problem.

The Rio is about 2500 rooms. MGM Grand alone is 6800. Hyatt won’t represent major competition to MGM in Las Vegas with this project, and it’ll be several years before the full project comes online. So it’s not a threat to the World of Hyatt – M life Rewards partnership… yet.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. Short answer: it shouldn’t jeopardize the MGM partnership.

    I was excited when I first read Hyatt was getting a massive hotel in Vegas, until I read where it’s located. I’m guessing many (most?) frequent travelers aren’t willing to stay across the interstate from the strip on our Vegas visits, so I will never stay in this hotel and will still make MGM hotels my first-choice when searching solely because of their Hyatt partnership.

  2. Maybe some or all parts of the Hyatt branded property rooms could turn out to be MGM-operated?

    Hotels within hotels or a brand operating multiple brands within a set premise or adjacent to each other seems set to be a growing trend. As a consumer, I don’t see much gain out of this approach other than in some places this MAY make it easier to hotel hop to run up stay count in a given hotel program and/or meet promotion terms in the same program.

  3. Good news is that every room is a suite at the Rio, so there will be plenty of suite upgrades available for all the newly minted Globalists!

  4. Yes Rio is off strip as anyone that goes to LV even once in a while will know. I stayed there when it was new in mid 90s and was very impressed. Then I stayed again 2 years ago for 11 nights during the World Series of Poker (I try to play a few events every year) and it was a dump. No money had gone into it for many years and it showed. Paint was peeling off the outside, elevators got stuck repeatedly and the furniture was really beat up. It needs a total refurbishment and hopefully this will result in that.

    As for the location, it isn’t bad. Yes I prefer staying on the strip (comped at pretty much all the Caesars properties) but if you are off strip Rio isn’t a bad location. The Palms (closed now but will reopen at some point) is right across the street and between them and the Gold Coast next door there are a lot of restaurant and entertainment options (Ping Pang Pong at Gold Coast has surprising good Dim Sum). Also it is less than a mile walk to the strip with side walks all the way. Finally, in the age of Uber and Lyft is it really that inconvenience to catch a ride to the strip for under $10 w tip? Those that want to stay in Hyatt’s don’t have anything this close today so it is an improvement.

    My question is what happens to the WSOP. Speculation is it will go in the new convention center behind the Linq but that isn’t certain.

  5. If the Rio was on-strip I’d be concerned, but aside from the Globalist upgrade and potential great deal on suites with points, I don’t think it represents enough competition to worry. I’m Globalist and have an upcoming Vegas trip and, if this were ready now, I’d still be staying with MGM at Aria or NoMad.

  6. I could see MGM/M life operating the casino at the Rio. Caesars’ contract with running the property ends at the end of this year.

  7. Las Vegas is boring. Party in Mianus. Cover charge: only 69 cents to come inside!

Leave a Reply

Your email address will not be published. Required fields are marked *