MARCH 7, 2005
By STEVEN MIHAILOVICH
Having achieved virtual market dominance in Internet travel bookings for almost every tourism product available in Las Vegas, Vegas.com has acquired a majority share in Casino Travel & Tours (CT&T) to burst into the real world of retail operations.
Serving consumers through the Internet and its call center, Vegas.com's acquisition rounds out its distribution points by allowing the company to now assist its customers face-to-face through CT&T's retail presence in numerous major Strip casinos and resorts.
The move is only the latest in Vegas.com's continuing adaptation of new technologies and marketing methods that has seen the company's volume more than double in the past year. While Vegas.com's advertising slogan is "It's who you know," the addition of CT&T more clearly encapsulates the success of the company's business strategy as "It's what you do."
"We are [always] looking at ways to enhance the overall operation in ways that benefit customers, clients, the company and the community, and bringing efficiencies in marketing and economy of scales," says Howard Lefkowitz, Vegas.com president. "[With the acquisition of CT&T], we are bringing in retail expertise to our operation ... It's all about Vegas. We care about the community and the ability to enhance the overall tourist product."
Started in 1998 by the Greenspun Media Group, Vegas.com has grown into the world's most visited city travel Web site as ranked by Internet rating service comScore Media Matrix. The site provides information and tips as well as booking services to meet visitor's needs such as flight tickets, accommodations , entertainment and car rental.
Like the city it sells, Vegas.com grew tremendously last year. The Web site averaged 1.7 million unique hits per month last year, more than double the average 800,000 unique hits per month in 2003. Lefkowitz would not reveal financial results of the private company.
Created by Jody and the late Dr. Elias Ghanem more than 20 years ago as a travel agency, privately-held CT&T offers practically the same services as Vegas.com at a retail level. In 1995, CT&T established a desk outlet in Excalibur Hotel and Casino, and has since expanded to similar outlets in major casino properties such as the Aladdin, Bally's, Luxor, Mandalay Bay, MGM Grand, New York New York, Palms and Paris.
According to Lefkowitz, talks to acquire CT&T began months ago and gradually led to the final deal signed last week. While the Vegas.com president would not divulge terms of the transaction, he said that his company acquired a majority stake, with Ghanem retaining an undisclosed interest.
In addition, CT&T president Michael Kritzler will remain at his post, overseeing the operations and managing the company's 118 employees.
Although Vegas.com already has retail operations at four locations in the valley, the company had been slow to grow the segment. The acquisition allows the company to expand into the retail market rapidly without expending time and money to grow it organically.
Moreover, the acquisition instantly puts the Vegas.com's retail segment in the most advantageous locations available, namely the casino properties where most of its current customer base is found when visiting Las Vegas.
"It gives us additional distribution points to meet customers in the real world," Lefkowitz says. "The combination of serving customers from the Web to the physical world is attractive. [The acquisition] brings economy of scales. You want to be everywhere your customer wants you to be. We want to make sure they have access to how they choose, when they choose."
Unlike the current buyouts of casino operators on the Strip, there is no operational overlap between the two companies, making it a matter of growth, not consolidation.
"We don't do anything in the same areas," says Lefkowitz. "We're technology and marketing and they're more local retail-based. [The two companies] do things that are complementary to each other. We are not taking two Internet companies and putting them together."
The purchase, however, brings the Internet company into the business of actually operating tourism products through CT&T's bus tours and limousine service. The company has more than 10 limos and two buses providing the same services that some of Vegas.com's clients, putting them in direct competition.
While Vegas.com will allow CT&T to broaden its penetration into the market through the company's Web site and marketing programs, Lefkowitz says there is no conflict with other limousine and bus tour operators, in the same way that a cable company does not hinder its content providers just because it builds a production studio to create its own shows.
"Many of our listed operators are aware and we'll make sure we retain equality along the vendor base," he adds. "There are many businesses where this occurs. We will continue to be fair and honest brokers in the different sectors."
The acquisition does strengthen Vegas.com's hand against competition from other travel and tour agencies, both actual and virtual. While Lefkowitz expects that it will take a few months to fully realize the possibilities, the real potential is that the new CT&T possession could grow soon and quickly to Strip casinos that do not have an outlet, based on Vegas.com's already-established relationships with the properties.
At the same time, Vegas.com can deepen its Web content and marketing campaigns while sharpening its partnerships with client casinos by having physical presence in them.
"We are looking to grow that business like we have our Internet business," Lefkowitz says. "We look forward to working with as many properties as choose to work with us."
The deal comes as Vegas.com completes or begins other moves, including producing new television commercials next month and a deal signed in November to feature the company's TV spots on promotion for high-definition TV at major retailers across the country such as Best Buy, Circuit City, Sears and Wal-Mart. The acquisition of CT&T allows Vegas.com to expand its marketing efforts, while giving CT&T a plug into its technical and marketing prowess.
According to Lefkowitz, the complementary nature of the acquisition is what puts the shine in the bright future, not just for the combined companies, but for the entire industry and the city that depends on it.
"We will continue make significant investments in the future to generate significant revenue and increase the market for the community," he adds. "As we continue to look for interesting and unique ways to expand, this is a case where one plus one could equal five."
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ISSUE:Acquisition of Casino Travel & Tours
BUYER:Vegas.com, an Internet and call center booking agent, and marketing company
NUMBER OF CT&T EMPLOYEES:118
NUMBER OF VEGAS.COM EMPLOYEES:About 250