Posted on: October 22, 2024, 08:07h.
Last updated on: October 22, 2024, 08:07h.
IHG and the Venetian and the Palazzo are ending a 15-year-old hotel licensing agreement. That pact will be terminated on Jan. 1.
Since Oct. 2010, the Las Vegas Strip integrated resort complex has been part of IHG’s booking system with the hotels affiliated as members of the InterContinental Hotels & Resorts global portfolio. IHG, which is one of the largest hoteliers in the world as measured by number of rooms, did not mention a reason why the partnership is being dissolved, but noted it will have little impact on the number of rooms available on its booking platform and that financial effects will be minimal.
Although the end of this agreement will remove 7,092 rooms or approximately 0.7% from IHG’s overall system size in 2025, the unique nature of the fee structure under this particular licensing agreement means it contributed less than $1 million or 0.1% of IHG’s revenue from fee business in 2023 and a net nil contribution to operating profit from reportable segments,” according to a statement issued by the hotel giant.
The news arrived a day after MGM Resorts International said the Delano at the Mandalay Bay campus will be rebranded to a W hotel later this year, extending that operator’s relationship with Marriott International.
Examining Why Venetian, IHG Deal Is No More
As noted above, IHG didn’t get into specifics as to why the Venetian and Palazzo are exiting the InterContinental Hotels booking system, but a change in ownership could be one of the reasons.
IHG struck the original deal with Las Vegas Sands, but that casino operator sold Venetian, Palazzo and a formerly eponymous convention center in 2021 for $6.25 billion. Private equity firm Apollo Global Management runs the venues while VICI Properties owns the real estate.
In terms of which party made the decision to end the IHG/Venetian relationship, it was either the hotel operator or Apollo. Five years ago, IHG and Sands reached an agreement that was slated to run through 2027 for three of the gaming company’s Macau casino hotels, but those properties don’t currently appear in searches on the IHG website.
Interestingly, those two companies have history together. In 2014, Apollo paid $459.52 million (in today’s dollars) to acquire 18 European hotels from Ivanhoe Cambridge. At that time, all of those properties sported various InterContinental brands.
Las Vegas Hotel Partnerships Are Often Fluid
Broadly speaking, the hotels on the Las Vegas Strip are controlled by gaming companies and traditional hoteliers often don’t put their names on gaming venues. However, the two sides often work together in strategic fashion, including leveraging their respective loyalty programs and booking systems.
However, as proven by IHG and the Venetian and others before that, casino operator/hotelier partnerships are often fluid and usually have expiration dates.
As of this writing, Apollo has not announced plans for a replacement of IHG at the Venetian and Palazzo.
Source link
