It seems like we’re often the bearer of bad news, but somebody has to do it.
A guest of Excalibur has informed us the resort’s 24/7 gift and sundry shop is now using surge pricing. We stopped by to confirm, and it’s true.
Surge pricing, of course, is most closely associated with Uber, the rideshare service. At times when demand is highest, Uber bumps up their prices.
We’ve shared some Las Vegas restaurants and bars use surge pricing, but we’ve never heard about it happening at a hotel gift shop.
There are virtually no prices on the items in Excalibur’s 24/7 sundry shop, including on things like toothpaste, sunscreen, bottled water, Pepto and snacks.
Guests are only informed of prices when they check out. Surprise!
We asked a cashier, “How do customers know how much things cost?” She replied, “They ask me and I tell them.”
Employees at the store communicated to one customer prices are based upon demand, specifically, hotel occupancy. The higher the occupancy, the higher the prices.
From what we can tell, this reeks of bean counters (commonly referred to as “consultants”) and MGM 2020. MGM Resorts owns Excalibur, by the way.
MGM 2020 is a massive cost-saving initiative. The plan is supposed to save the company $200 million by 2020 and another $100 million by 2021. Dozens of top executives have left the company, and hundreds of managers and directors were recently laid off, with 1,000 more to be let go in the weeks to come. Read more.
We’ve also shared machines will be replacing service bartenders as part of MGM 2020.
MGM Resorts has been scrutinizing every aspect of its business to increase profits, and we suspect they’ve done market research showing tourists don’t particularly care if their sundry store dental floss is $3 or $4 when they’re on vacation. If they don’t seem to care, why commit yourself to the lower price when demand goes up? (Related: If people still play triple zero roulette, why not make it even more of a thing?)
While incredibly annoying, we can’t really fault MGM Resorts for trying to increase revenue and profit, but there’s just something that seems wrong about surge pricing.
It feels like being nickel-and-dimed.
Resort convenience stores have always been a bit of a price gouge, and it compounds the frustration not knowing what you’ll be paying until you check out.
We’ve been beating the drum that visitor perceptions about nickel-and-diming are changing visitation patterns, and in combination with increased competition across the country, Las Vegas casinos are suffering.
It’s unknown if other gift shops at other MGM casinos will being implementing surge pricing (hint: they will).
Update (5/20/19): We’re hearing surge pricing is now common at resort gift shops both at MGM Resorts hotels and Caesars Entertainment. Two hotels mentioned specifically were Flamingo and Rio.
In Vegas at the moment, analytics drive everything. MGM Resorts has said MGM 2020 will include “key investments in technology” which will “lay the groundwork for the company’s digital transformation to drive revenue growth.”
Surge pricing is all about collecting data and determining what the market will bear, then adjusting prices based upon demand. “Dynamic pricing” is how MGM Resorts referred to this pricing in an earnings call.
It may be smart business, but it’s likely to be perceived as just another way Las Vegas is squeezing every penny from visitors.
There are glimmers of hope, of course. Wynn and Encore recently announced they’re rolling back paid parking (no validation needed). Other Las Vegas resorts are offering room packages that drop dreaded resort fees.
We’d love to hear your thoughts, and if you find yourself in a casino gift shop with surge pricing, let us know.