MGM's Michael Dominguez Reflects on 'A Year of Disruption' at Northstar's Destination California Event


"If you haven't noticed, we've had some changes in Washington," MGM's Michael Dominguez told an audience of 150 on Wednesday morning during Northstar Meetings Group's Destination California hosted-buyer event. "It is hard to talk about the state of the industry without talking about the state of the union," noted Dominguez, chief sales officer for MGM International, in introducing the session topic "2017: A Year of Disruption."

Political views aside, he said, we need to move past the discussion of the presidential election. "I look at it like this," he told the meeting planners and suppliers in attendance at the L.A. Hotel Downtown. "We were pregnant, now we have a baby to raise, and we're still talking about whether we should have gotten pregnant. That's not what we should be talking about anymore." 

On a positive note, "the markets have exploded since Trump took office. We are in second longest bull run in history. But political issues and many other forces are creating a highly disruptive scenario for global business."

Among other market forces affecting our industry: technology, global financial markets and terrorism. Some highlights from the presentation:

"We have to separate political theater from political reality," Dominguez said. For example, he added, discussion in the media regarding the "travel ban" has been largely misleading. "The executive order issued in January couldn't have been more clumsy, more poorly communicated or more stupid." However, he said, a second executive order followed, with more clarity and logic, something not reflected in most media coverage. 

"There currently is no travel ban in the U.S. There is a proposed travel ban that is being disputed in the courts. That proposal places a 120-day pause on refugees from Syria, and a 90-day ban on new visas only from six countries. Every one of these countries is a failed state or a harbor for ISIS, and their open-book strategy is to sneak into the U.S. with refugees because we can't monitor it." His projection for the outcome of the proposed ban is that "it's probably just going to die a quiet death in the courts."

Dominguez added, "International travel to the U.S. has been declining since last year, but that's because of the price of the dollar; it has nothing to do with travel ban."

A force that nobody can effectively prepare for, Dominguez said, is the speed of change in today's world. "If you are doing a five-year plan, your fourth- and fifth-year goals are just wishes. I can't tell you what the industry is going to look like in 2018, let alone in five years. In 2005, anyone predicting what the world would look like in 2015 would never have seen this coming. If you are planning past three years, stop doing it." 

Technology will continue to change our world in dramatic ways that we can't forecast -- or adequately adapt to. "We are so far behind we will never catch up," Dominguez said. "[As a society], we've all moved to mobile phones, and we are going to all be moving to voice-activated devices very quickly."

In some ways, expectations about digital technology have missed the mark. "Is it a digital world or is it a physical world? It's both. Amazon is about to open 200 physical bookstores. They're taking analytics from their site to open stores that will be stocked with only their most important items," Dominguez said. "Another throwback is a surge in the popularity of vinyl records. And they're being purchased by Millennials and Generation Z. The younger generations are missing something tangible with music." Also unexpected: an explosion in the number of travel agents in the past three years: "Their fastest-growing audience is Millennials." 

"If you are pigeonholing people based on generations, you are making a huge mistake," said Dominguez. Especially with respect to older Millennials, "everything we know about them is wrong. They want to meet face-to-face, and they want to travel more than their peer groups." We need to stop talking about demographics, he urged: "Demographics are dead. Psychographics are everything. Instead of creating a meeting for an age group, design a meeting for behaviors."

The U.S hotel industry has had record demand for several years. "I have never seen this pattern before, and I've been doing this for 30 years. It sets the landscape for next several years," Dominguez said. Occupancy in the U.S. is the highest in history, particularly in the top-25 markets. Second-tier cities have space, but airlines have cut lift to those cities. "That's the conundrum everybody's faced with. As demand continues to move, you'll see airlines adding lift in those cities.

Competition for group space is coming from the transient market, said Dominguez. While group business has grown, "transient is on fire. Group is growing, but nowhere near the rate of transient. Transient will pay $30-$40 a night more than the group room rate. That's what's driving group rate up." International travelers, in particular, are booking 90-120 days out, closing windows of opportunity for meetings. 

"In the old days, our transient business was coming in within a three-week window," Dominguez noted. "We are 84 months into a cycle of continued positive RevPAR growth. I believe it's going to go for a couple of more years. Average spend on lodging is growing at triple the rate of the GDP. 

"For meeting planners, flexibility matters. Tuesday through Saturday in the U.S. we are almost sold out. If you are not bringing a Sunday-Monday meeting to the hotel, you have no leverage. There's not a salesperson in this room who won't give you a great deal for a Sunday-Wednesday pattern. That's what the data is telling us, and that isn't what it looked like five years ago.

"We are not building ballrooms today," Dominguez continued. "The amount of meeting space per guest room is shrinking. Supply is up, but it's not meeting hotels. Demand has way outstripped supply for the past years. And there's still a lot of pent-up demand. Meanwhile, the only real growth in meetings is in meetings for 1,000 people-plus. That's one of the reason Vegas is doing so well. The rate of change in demand in the group market is slowing down. The rate isn't coming down because there's no new space. That will be a detriment long-term if we don't fix it. But we're doing something about that now."

In conclusion, said Dominguez, "We are holding onto traditions that don't make a lot of sense. Every model has to change." He quoted the late Alvin Toffler, an American writer and futurist, who said, "The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn."