Industry Research

The Mega-Changes Shaking Up Your Operations — Now

Martin Romjue
Posted on March 27, 2018
Looking for growth in motorcoach and chauffeured clients? Try luxury hotels, esports, and those spend-hardy Baby Boomers, Dominguez says. (photos courtesy of UMA)
Looking for growth in motorcoach and chauffeured clients? Try luxury hotels, esports, and those spend-hardy Baby Boomers, Dominguez says. (photos courtesy of UMA)

SAN ANTONIO, Texas — The world is changing faster than we’ve ever known in any historical period, and shows no signs of slowing down. And the faster it goes, the less you know.

So if any business, including the ground transportation services that date to the early 20th century era of motoring, want to survive and succeed, they will need a flexible outlook to tap the profitable markets evolving from constant change.

Michael Dominguez, the chief sales officer for MGM Resorts International, offered a trove of such predictions and insights on Jan. 7 as the keynote opening act for the United Motorcoach Association’s annual Expo. The patchwork of trends and indicators he outlined can help ground transportation operators in their strategic and capital outlooks.

Before an audience of mostly motorcoach company owners and managers, he debunked the practice of long-term visioning. “Any business plan we have today that is looking further than three years out — it’s called a wish, it’s called a hope. It is not a plan. You should be doing plans that are no more than three years.”

Half of the companies on the Fortune 500 list that disappeared since 2000 vanished because of the digital world. “Three-fourths of the biggest, baddest companies around will not be the biggest, baddest companies in the next 10 years.”

Throughout the presentation, he referred to Amazon.com and its recent foray into the grocery and bookstore markets. He also posed a tough question to bus operators.

“So what Amazon looks at is an opportunity to grow Prime memberships. Even if they don’t make a lot of money in groceries, they will make a lot of money everywhere else in their core business. What happens when they decide to buy a motorcoach company and it has nothing to do with making money? It has to do with automating an experience and making it better and, candidly, finding a new audience for Prime membership.”

Custom Experiences
That means customization has become more valued than ever across all products and services. Consumers can now “get what I want, where I want it, and how I want it.”

“And yet we have not designed our businesses to be conducive to that experience,” Dominguez said. “Customization is the key, and it doesn’t matter if it’s a meeting, hotel, or travel experience. I need it to make it mine. And I live in a world that everything can be the way I want it to be.”

Building a business geared toward custom experiences and products takes a lot of work and change, he said. “How complicated has the world become with choices? Every facet of our life has changed into customization. Even bottled water used to be easy. Now they have flavors and brands, with or without sugar.”

Are you creating an environment where people have such choices? Dominguez asked the operators. “Because that’s the world we live in and that’s what people will continue to buy.”

Don’t bother with any business plans beyond three years, says MGM Resorts International chief sales officer Michael Dominguez.
Don’t bother with any business plans beyond three years, says MGM Resorts International chief sales officer Michael Dominguez.
GROWTH OPPORTUNITIES
Dominguez honed in on four areas ripe for experiences and travel revenue potential for operators:

NO. 1: Strong Outlook For Hotels
One industry full of growing choices for experiences and closely tied to charter tour groups and chauffeured clients is the hotel industry, which serves as a related indicator to ground transportation.
That industry has enjoyed four consecutive years of all-time occupany records. “We have more rooms than we ever had in history and we sold them at a higher average rate than any time in history.”  

Last year, almost 66% of all hotel rooms in the U.S. were occupied. The industry has been sucking up 2% of new supply every year and staying at 66% occupancy.

“What’s leading the charge is the upscale luxury segments,” Dominguez said. “The charge is still on the luxury and the upper upscale, which means it’s not about price sensitivity as much. It is literally about experience and offerings that are continuing to drive the charge.”

The esports industry has become the fastest growing segment for the meetings and conventions sector, presenting new revenue opportunities for motorcoach and bus operators.
The esports industry has become the fastest growing segment for the meetings and conventions sector, presenting new revenue opportunities for motorcoach and bus operators.
NO. 2: esports Tournaments

The meetings industry is seeing disruption all the way around, Dominguez said. As an example, he cited the esports industry, the fastest growing segment for the meetings and conventions sector. He predicted esports will be a $5 billion industry by 2020 and an Olympic sport by 2024. Two universities have just launched teams of esports just like you would have a football team or a basketball team.

“Most people don’t even realize these are some of the biggest meetings we are hosting today,” Dominguez said. He showed a shot of the World Championships of League of Legends, a single game released by Riot Games. Riot Games was Inc.’s “Company of The Year” last year at $4 billion in revenue.

It drew 100,000 people to a convention hall and 35 million people watching worldwide on Twitch, which is the YouTube of gaming. “Guess who bought Twitch for $1 billion? Amazon. But that audience, by the way, is larger than that of the NBA finals of last year. That’s how big and pervasive this is. Everybody’s going to think it’s a bunch of kids, but who is the largest audience playing games? Ages 34 to 44. And the largest growing segment is females.”

“So if I’m in your seats, I don’t know how all these people are traveling now. There are opportunities to start understanding esports, how big it is, and how fast it’s growing. It’s a tremendous growth opportunity in all segments of our business. Most people have never even heard of it. esports has actually been defined by Webster.”

NO. 3: Generational Changes
Baby Boomers have been the generation of stuff. With the oldest Boomers now turning 73 this year, an increasing number will have to withdraw from their 401k plans as they turn 70, the age when an investor must start withdrawals.

“They were the birth of the 401k plan,” Dominguez said. “So a generation of stuff now is going to have more income coming in than they have to take out. What do we believe they’re going to do with it? We believe they will travel and look for experiences.”

The media, experts, and business analysts need to stop constantly talking about generational demographics, and focus on “psychographics” instead, Dominguez said. “What we’re finding, again, is they (Millennials) are not that different in all the new research we’ve seen. Study the behavior, not the age. If I like mobile, I like mobile. That does not make me 20, 40, or 60 years old. It means I like doing things on a mobile device. If I like video on demand, I like video on demand. It does not put me in a certain age category. We make the mistake of saying, ‘Anybody who likes mobile has to be young.’ No. Anybody who likes mobile may have gotten there faster, but it does not mean it puts me into an age category. Focus on the behavior and the behavior changes, and your businesses will be much better off.”

NO. 4: Global Visitors
Since the 1980s, GDP in the U.S. has risen 78%. “Yet the amount of money we spend as consumers on travel and experiences has grown at 245%.”

To assess the health of the travel market, follow the dollar, Dominguez said. “Every time we see the dollar start to depreciate, we see travel from those countries start to appreciate. It is something very simple and it’s always economically driven.”

All the data right now points to declining international traffic because of the strength of the dollar, he said. “We declined in international audiences in 2016 because the dollar appreciated by 5.1% that year. We actually already started declining well before President Trump ever started talking about executive orders on [travel] bans.” [Since Dominguez’s presentation, the dollar has weakened somewhat relative to other currencies amid calls from leading bus and travel industry groups for more visitors. Treasury Secretary Steven Mnuchin stated at the Davos international conference a weaker dollar is good for trade].

Digital Or Physical?
To underscore the value of providing unique experiences, Dominguez detailed the state of the eternal question over digital versus physical, or better known as digital versus analog, or print. The question is not a choice; it should be “and” because it’s both, he said. “If you need any more proof, the Amazon online book retailer is opening up 200 physical bookstores this year. It is not physical, it is not digital. Those who do it well are combining the experience.”

Likewise, growth in digital e-books has gone flat. “It’s like everything was going paperless. [But] it’s not the world we’re living in. You need to have a really good digital experience and a good physical experience as well. It does not mean print is dead, and all the evidence tells us that.” He cited numbers showing four times as many printed books are sold for every digital download.

Even more startling is the fact U.S. consumers bought 15 million vinyl records last year, the second highest number since 1991. Barnes & Noble now sells them. “Guess who the largest audience is?” Dominguez asked. “A bunch of Millennials and Generation Z. It’s ages 35 and younger who are buying these records at almost 60% of all sales. What we have found is this generation didn’t have anything tangible with their digital devices. There’s something tangible about having a vinyl record. Digital is convenient but not tangible. It doesn’t move the emotions the way it does when you grab an album. You hear the crackling, or you actually see the artwork. That’s where we’re headed today.” Conclusion: We will never have an all-digital world.

Are You Eternally Literate?
Tying together his pattern of change and opportunities, Dominguez ended with insights from the late futurist Alvin Toffler, who foresaw many technological and cultural trends decades ahead of the experts in his groundbreaking late 20th Century bestsellers “Future Shock,” “The Third Wave,” and “Powershift.”

“Illiteracy in the 21st century has nothing to do with your ability to read or write. It has everything to do with your ability to learn, unlearn, and relearn,” said Dominguez, quoting Toffler. “Most of us are really great at learning. Most of us can relearn. Most of us are really bad at unlearning. And the older we get, the harder it is to unlearn. The harder it is to get out of your head what you think you know.”

“What you know may have been relevant in the time period you knew it, but it’s not necessarily always relevant today. When somebody throws out a new idea, if the first thing that pops into your head is ‘it’s a silly idea, it’s never going to work, or I’ve seen it before,’ congratulations. You’re illiterate in today’s world. And you’ll be irrelevant in the next five years. Your first thought has to be, how do we get that done?”

Related Topics: building your clientele, business growth, business opportunities, business trends, charter and tour operators, hospitality, industry trends, keynote speakers, motorcoach operators, United Motorcoach Association

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