Marriott (MAR) and MGM Resorts (MGM) are betting on each other's most loyal members to boost their bottom lines on the Las Vegas Strip.
On Monday, the pair announced an exclusive long-term licensing agreement that creates the MGM Collection with Marriott Bonvoy. The program will launch in October and encompasses 17 of MGM's resorts — notably those with a presence on the Strip such as the Luxor and Mandalay Bay.
Here's how it works: The plan allows for booking MGM stays on Marriott's platform (stays could still be booked on MGM's platform). Rewards members of each will be able to link their accounts and redeem points for stays at the 17 MGM locations.
MGM has 40 million loyalty members under its MGM Rewards program, while Marriott boasts 180 million under its Bonvoy brand. Loyalty points are viewed as currency for frequent travelers and a deciding factor in picking where to stay. Travel-focused businesses such as Marriott and MGM use the rewards systems to drive new business by offering various incentives.
Marriott also said it has inked a loyalty marketing agreement with BetMGM, MGM's online gaming and sports joint venture. Under the plan, Marriott rewards members will be able to earn points on certain BetMGM transactions and participate in exclusive games and experiences.
“When we think about growth, this increases our global footprint by 2.4%. So it's a great shot in the arm for our growth story," Marriott CEO Anthony Capuano told Yahoo Finance Live (video above). "It was just overly compelling for both of us," MGM Resorts CEO Bill Hornbuckle added.
The tie-up comes as the Las Vegas Strip continues its rebound from the damaging effects of the COVID-19 pandemic.
Visitors to the Las Vegas Strip increased by 1.5% year over year to 3.5 million in May, according to the latest data from the Las Vegas Convention and Visitors Authority (LVCVA). The LVCVA said in a statement that demand for activities on the Strip was "strong" in May.
The visitor improvement was led by the continued revival of the convention business. Convention attendance improved 16% from the prior year to 453,900 visitors, according to the data.
Revenue per available room — a key metric for hotels — rose 6% year over year to $169 for Las Vegas Strip properties. Occupancy levels improved 1.5% year on year but still remained about 5.2% below 2019 pre-COVID levels.
Weekend visits to the Strip continued to lead an overall improvement in visits.
"We are bullish on further Vegas growth," Macquarie analyst Chad Beynon said. "We think the return of conventions and a strong sports/event calendar over the next couple of years (e.g., NCAA men’s Division I basketball tournament games, Formula 1, LV Raiders and Golden Knights games, 2024 Super Bowl and others) should provide some level of support for Strip GGR and non-gaming revenues."
From the casino space, Beynon has Buy ratings on shares of MGM Resorts, Caesars Entertainment (CZR), Golden Entertainment (GDEN), Accel Entertainment (ACEL), Vici Properties (VICI), and Century Casinos (CNTY).
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com
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