Las Vegas tourism executives discuss the city's rebound

By Kenneth Kiesnoski
Travel Weekly invited tourism board officials, along with leading hoteliers, tour operators and other Las Vegas-area suppliers, to gather for a roundtable at Onda Ristorante at the Mirage hotel and casino on the Strip to discuss the state of the destination's fortunes. The event was moderated by Travel Weekly Destinations Editor Kenneth Kiesnoski. The transcript has been edited for length and flow.

Travel Weekly: Las Vegas got slammed in the recession, but there have been some good numbers for the destination of late. Is Vegas back on track? How are things looking?

Art JimenezArt Jimenez, senior director of leisure sales, Las Vegas Convention and Visitors Authority:
Well, we had 15 out of 16 months that we had visitor increases. So we had over 10 straight months in a row. We hit 37.3 million visitors, which is about a million more than we did last year. And we're forecasting to do about another million more next year, so about 38.3 million for next year. Actually, our problem never was with visitation.

TW: Why, though, did Las Vegas seem to get hit harder than other destinations by the recession?

Jimenez:
If you go back to the "AIG effect," we had a lot of corporate America, certain types of businesses, not come to Las Vegas as this whole economic recession kicked into gear. In the fall of '07 and '08, we saw those types of businesses just stop coming. We saw a lot of trade shows not send as many people. So a CES [Consumer Electronics Show] might send 30 people from Sanyo but maybe only 20 people were coming. So you start multiplying that across every trade show, it started to affect our business traveler.

We do have our leisure base, and it is very strong. We had a good year last year. We have some good traction now. We've never had any problems with people coming here. The problem was with the spending of money, the spending on different amenities in town.

TW: Debbie, how is Vegas is performing, based on sales at Vegas.com?

Debbie Bingham, vice president of business development, Vegas.com:
It's definitely on the increase. We've seen double-digit growth in sales of hotel rooms, the [average daily rates] are up and occupancy is up, so we're very positive. There are also a lot of show ticket sales.

Josh Swissman, vice president of marketing, the Mirage: I echo those same sentiments. Specifically for the Mirage, we're seeing in certain segments a marked increase in the number of room nights, and we're also seeing the rate start to go up again, which is a welcome, welcome change.

TW: Alix, how has it been for a tour operator and tour provider like Pink Jeep Tours over the last couple years?

Alix Reed, general manager, Pink Jeep Tours Las Vegas:
I think business has actually been increasing. We're seeing the incentive travel come back and the conventions start to increase, and that really bodes well for our group business. Our group business back in '08 was down about 75%, which really hurt the bottom numbers. But in the last year, those have been significantly climbing up, and the projections we have for spring are phenomenal. Our group business is coming back strong, so we're really excited.

TW: I'm staying at Aria at CityCenter, a great resort development and one of the few of several planned, high-profile projects here in Vegas that was not put on hold or canceled during the recession. Ravella at Lake Las Vegas just opened on the premises of a failed Ritz-Carlton. Was Vegas just overdeveloped for the market when the recession hit? And will we now see some of these stalled projects come back online?

Jimenez:
At some point back in '06 or '07, there were well over 100 hotel-condo or condominium projects on the books -- the Manhattanization of Las Vegas, if you will. Of course, looking forward, obviously a lot of those didn't come true, come to fruition. And maybe under 12; certainly there is a handful of them at CityCenter. As far as being overbuilt, we have 150,000 hotel rooms now on the market. I think that Las Vegas is on a rebound to absorb that debt visitation.

If you go back and look at how many rooms, we're running at 80% occupancy right now out of 150,000 hotel rooms. That means we fill 119,000 hotel rooms every day of the year. Compared to New York City, they don't have 100,000 hotel rooms, not even in the five boroughs, not even including New Jersey. So we are filling 119,000 rooms per day, OK? If you go back to previous recessions, Las Vegas has been quick to bounce back.

We ran some numbers that showed what happened in 1982, in 1998 and in 2002. They showed where we were on occupancy levels: We were still running 22 points higher on occupancy than the national average. So we've always run 20, 22, 25 points higher. 

Swissman: That said, our buildings were made to run at much higher occupancies and be profitable than a bunch of other markets in the States. So I think that was a large part of, at least from a property operator's specific standpoint, what drove that heavy discounting, that overdiscounting in many instances, and that ultimately affected our profitability pretty substantially.

TW: When a new hotel opens, it creates a huge buzz. Everyone wants to see it and stay in it. That lasts about a year or two, and then possibly it becomes a has-been in terms of appeal. Do some of the older properties like a Mirage, a Bellagio, a Venetian book the same as newer ones in the current climate? Are they rebounding, as well? Or is there an "Aria effect," where newer properties do better?

Swissman:
We hope there is an Aria effect, right? We want a new property like Ravella or Aria or any of the CityCenter properties to generate incremental business in town and to bring more people to the property. And it's only natural that they get a disproportionate share of visitation initially. I'd want to see something in a place that I was going to that's brand new, whether or not I was staying there.

But if you look at an older place, the Mirage is a great example. This property is 21 years old, and it doesn't look it at all. And to the extent that there is capital reinvestment going on in a particular property over those 20 years to keep it looking fresh and updated and keep in line with the marketplace from a room product, from a food and beverage product standpoint, from an entertainment and nightclub standpoint, then you will remain relevant in the marketplace. And you will continue to enjoy stronger marketshare than perhaps a property that's as old as the Mirage but hasn't had the aggressive reinvestment schedule that the Mirage has had over the last couple of decades.

Jimenez: It is very important that our hotel properties and our tours and shows are constantly being updated and revamped. Over 80% of our visitors are repeat to Clark County. So to have that kind of loyalty and brand recognition is so vital to what we do here. There is a core visitor. They believe in Las Vegas. They will come. They don't need to be told what to do. When they think vacation or getaway, they think Vegas first.

We've identified about 38 to 40 million people out there in the U.S. that we call "persuadable." They're on the fence, or they don't think about it. Our new messaging is going to target that persuadable. And what the research is telling us is that people want to make sure that they made the right decision to spend their money. So they know that if they book a three-night stay at the Mirage, they know that they're going to have a good experience because the property looks good, great shows, great entertainment. So we're going to be focusing more on that. We've got a balance of the retail vs. branding message that shows more of what they're going to get for their dollar.

Swissman: That's a great point. To have that large group of people, larger than what I would have imagined, being those persuadables ... not only do you need something new; you need to tell people what to do. It's not a "I'll go to Vegas and figure it out when I get there" kind of attitude like it was a few years ago. You have to give them very compelling, multiple reasons to get them to come to the destination. And the more you continually reinvent yourself or open new properties or have creative advertising campaigns, then you will get that large group of folks to continue to come. 

Marty BertoneTW: Speaking of new properties, why has Dolce Hotels decided to enter the Vegas market with the Ravella at this time? Can you talk a little about why you looked at the former Ritz-Carlton Lake Las Vegas site, and what your expectations and experiences are coming into the market at this point?

Mario Mazzone, general manager, Ravella at Lake Las Vegas Resort:
I think it fits well with the Dolce Hotel resort properties. We have about 29 properties around the world in Europe and the U.S. They are more suburban properties catering to conference and incentive groups and golfers. This property fits very well. Obviously, we will not be directly competing with the market on the Strip. We have different products that we are offering. It's a great property; it was a Ritz-Carlton before, and they left a great property. It's spectacular, and we are very glad to be there.

TW: Marty, where do you think the Ravella can do right where the Ritz-Carlton did wrong? Do you think they were just a victim of circumstance?

Marty Bertone, director of sales and marketing, Ravella at Lake Las Vegas Resort:
They were definitely a victim of circumstance, as well as every time they tried to overcome an objection or bad press about the location, something else happened. It was definitely a domino effect, and finally it just was not profitable for them to operate that hotel.

With that said, Dolce's operational footprint is definitely a different model from Ritz-Carlton, and that's why we think we will definitely be able to turn that property around.

TW: Can you define that a little bit? What and how it's different?

Bertone:
Well, just from a staffing level, operationally, when Ritz-Carlton opened that hotel they had 475 employees. We opened our hotel with about 125 or 130 employees. So, from an operational standpoint, yes, it is a five-star, [AAA] Five-Diamond resort -- or was, I should say. We are looking at it as a four-star or Four-Diamond hotel, and we will not have that type of service that Ritz-Carlton guests are used to. We will provide great service, but it won't be that ratio of four staff members to each hotel room.

Mazzone: I think also that the Ritz-Carlton was primarily appealing to a market that was probably the 1% that was on top of the pyramid. We are trying to enlarge that market that we can open up, and obviously offer more accessibility in terms of price.

TW: Much new resort development has been geared toward the upscale traveler. The shops facing Las Vegas Boulevard at Crystals in CityCenter include Gucci, Carolina Herrera and other luxury brands. Doesn't Vegas need a broader spectrum? Not so luxury-heavy in terms of properties, attractions, activities, even shopping for the visitor?

Jimenez:
Shopping, next to sleeping and eating, is the No. 1 tour attraction that is done by every visitor, whether they are international or domestic. On the shopping front, I think if you look at what's going on, a lot of these retailers could be on the move to separate themselves from the traditional Saks or Loehmann's to be a product within that store, and maybe going at it on their own, cutting out the middleman. But also to have your logo on Las Vegas Boulevard, at [CityCenter's] Crystals, that could be branding right on the Strip. We all know that all of our hotels have great shopping, we all have great boutique stores or small areas within the hotel, and one successful customer could make their month in one purchase. But certainly in Las Vegas there is shopping from A to Z, from outlets to middle to high-end, and certainly to the ultra high-end.

TW: Does Vegas.com track what sort of traveler is coming to Vegas? Do they represent the full spectrum of consumers? Who is the Vegas traveler? Who's going to your site and researching and booking and doing all those things?

Debbie BinghamBingham:
It's a wide range of books. We definitely listen to the voice of the customer on a continual basis and look to get them to purchase as much of their trip as they can prior to coming. We're more of a destination-based website, so it's air, hotels, shows, tours and attractions, an all-in-one-shopping-cart purchase. So it's definitely something we have a big focus on, and we have been increasing that focus. As the economy shifted, we had to get back to your core and your books.

TW: In the online world as well as the real world, what is Vegas' competition? Is it "Orlando.com"? Is it "Mexico.com"?

Bingham:
We have Mexico.com, too. [Laughter]

TW: So you've got a finger in every pie. [Laughter] If consumers aren't going to Vegas.com, and booking Vegas in the real world through the virtual world, where are they going?

Bingham:
It's other OTAs, plus suppliers themselves. Their goal is to try to book more direct, too. Yes, Josh?

Swissman: We like all other different relationships that we have, but yes, we try to drive people to our own sites, as well.

Bingham: Plus, we all have to compete together against all the other locations in the world to travel to, so we're all in "co-opetition" with each other.

TW: Is there any specific location that is tough competition for Vegas?

Bingham:
I'd say Orlando, New York, San Francisco. And all their ADRs are so much higher than ours right now, so we're still a great value. But the hugest spectrum of any type of property, show or tour that you want to go to, we have everything here.

Swissman: That's really in all sort of segments of room offerings where we're a better value.

Bingham: Like Art said, we have 149,000 or so rooms to book every night, and we're at 80% occupancy. I think the national average is 57%, so we still have great occupancies, but the ADRs could be a bit better. And our booking windows are increasing, as well, so that's what Alix was speaking about, with future bookings and groups and conventions coming back.

Jimenez: If I could just jump in for a minute about airlines. Typically over the last few years, 51% of our visitors drove, and 49% flew. Today, that number is at 56% driving, 44% flying. We had a dramatic reduction in capacity in fall 2007 and throughout 2008 with US Airways changing their hub model. We probably lost 20,000 seats a day in the market. And with all the new properties that are built, the higher-rate properties, there could be anywhere between 30,000 and 40,000 rooms on the Strip [for the high-end traveler], 80% of them fly into the market. So we're very, very aggressive with the LVCVA in trying to secure more airlines.

We've been very successful with Virgin Atlantic coming over from the U.K. British Airways is going to increase their flight loads by 10% beginning June 1 just by changing aircraft. That will put 60 to 62 people more on each aircraft than we have today. Our hometown airline, Allegiant, has been very successful with their model of all-nonstop flights into Las Vegas. They are constantly adding new service. Spirit Airlines just added new service out of Chicago and will launch a new service out of Dallas any day. So we're very aggressive in trying to secure that airline seat because we need to have more seats coming into the market.

Terminal 3 is opening in June 2012, and that's going to add 14 new gates. You'll be looking at [parking] five widebodies there at one time.

TW: Double-decker Airbus A380s?

Jimenez:
Well, I don't know about those, but at least Boeing 747s: you know, five widebodies at one time to accommodate international visitation into the city. And international visitors accounted for 12% of visits in 2009 and were about 18% in 2010.

TW: Do you see bigger growth from international markets going forward, as opposed to domestic? Is that your growth market?

Jimenez:
We'd like it to be. We're very involved on the lobbying side. We're very involved with the U.S. Travel Association, and [LVCVA President and CEO] Rossi Ralenkotter chairs one of the international committees for the Travel Promotion Act. But we saw a big increase this year out of Korea just by having the visa waiver added to that program. Certainly Canada has been great for us. The U.K. has been great for us. But yes, international is going to be a very big focal point for us.

TW: Have the Mirage and other MGM Mirage properties noted an increase in international visitors?

Swissman:
Yes, I'd echo that, especially at our higher-end facilities. It's even slightly higher than the average. It's upwards of 20%: One out of every five customers at the Bellagio now is an international customer. They're coming through all sorts of channels, through our partners in wholesale channels as well as directly. And there is a gaming customer who comes, as well, internationally. We're seeing many more of them, and they're great people to have because their stay patterns are a lot longer. And they book further out, so they're great customers.

Reed: I will also say that the international customers are great for the tour business and sightseeing business because they have a longer stay, and they love to go out on tours to see the Grand Canyon or any areas around Las Vegas where there are some beautiful parks. So we are thrilled with that. Many of [the hotels, such as the Mirage] are also our customers and our clients, and we get that international customer from them.

Swissman: They're good at planning ahead too, aren't they?

Reed: Yes, they are good at planning ahead. And we absolutely adore them.

TW: Are the international visitors' spends per head higher because they might skew more upscale than the standard visitor to Vegas?

Reed:
I don't think that we would necessarily be able to figure that out. What we do find is that they have more time and that they are accustomed to, and want to, go out on an activity, outing or tour of some kind. We pick them up at all the different hotels in the city, at all different price ranges. And they come in the summer a lot, which is a great time for us because that's when it's really hot and no one else wants to come here. [Laughter]

TW: People from the Persian Gulf, right? Summer in Las Vegas is winter for them. [Laughter]
Josh SwissmanReed:
They want to go to Death Valley, where it's 132 degrees. What?! [Laughter]

TW: Debbie, does Vegas.com get a lot of international traffic?

Bingham:
Yes, we do, as well. Our numbers are higher-skewed than what the LVCVA reports, as well, because it's the Internet. [Laughter] And they like to buy multiple things: tours, shows, tickets. They do plan in advance. Any given night there are 150 shows, 50 nightclubs, I don't know how many restaurants. There are so many choices, and we are always reinventing ourselves as a destination, so you really need to educate yourself before you arrive in town to have a great time. Customer experience is very important so that we can keep those return-visitor numbers as high as they are.

TW: A decade ago, there was talk of a move toward families and attractions that appeal to them, and away from gaming and other adult pursuits in marketing Vegas. What's the case today? We've all seen the adult "What Happens in Vegas, Stays in Vegas" campaign. To whom and how is Las Vegas going to be marketed going forward?

Jimenez:
At the LVCVA, we've never marketed to children. We've always focused on our core market, and that's adults. When a hotel in town opens a roller coaster or theme park, that's part of their business plan or business model, and we certainly incorporate that into our talking points or newsletters. But we've stayed true to our core: adults.

"What Happens Here, Stays Here" has had a shelf life of about seven years now, and granted it's had variations depending on what is going on in the marketplace. I think we've had six campaigns since the fall of 2007. We have had to react to what was going on over the last three years. We went from a heavy retail to a crazy-times message to a "What's your excuse to get out here?" But the overlaying campaign always has been "What Happens Here, Stays Here."

TW: At Ravella at Lake Las Vegas, is it going to be the conventioneer, the golfer, primarily the adult? Or will your marketing have a family component, as well?

Mazzone:
Definitely family. The leisure business is very important to us, especially on weekends. We have a children's program, and we are developing a program as well for the full family, absolutely.

TW: And I imagine California families, drive-in guests, would be a big part of that, right?

Bertone:
Right. Drive market -- California, Arizona -- would be who we would target for transient leisure guests with families.

TW: Getting people to Las Vegas -- flying them in, having them drive in -- is one thing, but then getting them to their hotel rooms and around town is another. I saw some beautiful new buses out there on the Strip; I think you have a new high-speed bus system in place. Can you talk about transportation within Vegas, which has long been an issue?

Jimenez:
We have a monorail that connects eight hotels along the east side of the Strip and going to the convention center and the Hilton. Surely there is transportation between the CityCenter and MGM Resorts International and properties connecting their guests with their monorail service. We do have a couple of double-decker buses driving around town.

TW: Are there any plans to get that monorail down to the airport now that Terminal 3 will be opening?

Jimenez:
For a long time, there was talk that it would connect from its southernmost point to Terminal 3, to coincide with that opening, but I haven't seen anything.

Reed: This destination is very unique in the sense that it has an agency that oversees transportation, the Nevada Transportation Authority, so anybody that's going to be transporting customers in the state has to be certified. They keep an eye on inventory. I think it's very helpful. There are always going to be times when your inventory is sold out, like times when [CES and other shows are] in town. But they work very hard to make sure there is enough transportation, that it's safe. It's a very impressive organization; we work very closely with them. So that's unique in this city; a lot of cities don't have that.

Jimenez: If I can jump in again and talk a little bit about what's unique in the city, it's our special events. We have a division of the LVCVA, Las Vegas Events, that focuses on bringing in special events during certain periods. Twenty-five years ago, when we secured the [National Finals Rodeo]contract, December was a slow period, so we held them here for the last 25 years. Let me give you an example: [In February 2011], we had the USA Sevens Rugby Tournament, with teams from all over the world, blending into the Magic 2011 [fashion trade show], which blended into the Travel Weekly LeisureWorld 2011 show, so it became a three-day weekend. The weekend before that, we had the Ultimate Fighting Championship, which led into the Chinese New Year. So knowing that those trigger dates are coming up, we constantly do have things lined up to attract more visitors and to make it relevant for them.

TW: So the conventions and events business is firmly back?

Jimenez:
Absolutely. I mean, we had a new show two weeks ago; it was an air conditioning show. It had record attendance, and it had been in Orlando for a while. So they rebooked to come back with us, and it won't be for a couple years, but they were very excited about Las Vegas, and they were sending out daily bulletins to their exhibitors, and the exhibitors were saying ...

Mario MazzoneMazzone: How many attendees?

Jimenez: That was about 50,000. That was a brand-new piece of business, but what made it really exciting was that exhibitors were saying, "I booked business, I signed contracts." And that's what you want. That's what you want from the exhibitors. So again, we had 1.2 million visitors go through the convention center last year. That will increase this year, and if everything follows through, we'll be on course to increase that number. We had a show come in that cycles in every three years, [construction conference] Conexpo, which was here the last weekend of March. That is about 180,000 attendees.

TW: Do you track whether a lot of these conventioneers bring their families? Las Vegas seems like an obvious place where they'd want to bring their spouse, bring their children, maybe extend the stay?

Swissman:
I can speak anecdotally to that. Typically, the people who come out for the big conferences like Conexpo or any of the others, usually, I've seen in my experience, don't come out with their families. It's really that repeat visitation and just getting them exposed to the destination beyond the four walls of what their business purpose might be out here that is really the key to getting them to come back and bring their families.

TW: Does Pink Jeep Tours get a lot of business out of the conventioneer and the person here on business? Is there any way for you to track that?

Reed:
We don't track that currently, but I think that it would be on the repeat business, because traditionally for us as a tour operator, during the big shows like Magic, it will be slow. It's a good time to do some cosmetic stuff on our vehicles because they are going to be sitting around for a few days. Which is OK, because a lot of those people do come back, and they say, "I saw your vehicle. We want to go to the Grand Canyon. We wanted to go last time but didn't have time." But I think the restaurants and the shows still really do well from those conventions.

Jimenez: Well, on the flipside, Las Vegas did 18,000 meetings last year, and we did 20,000 in 2007 and 2008, and we have data that tells us that people are on the floor longer, on the trade show floor, in Las Vegas than in other cities. So they're actually doing more business, getting to the exhibit floor. We have a pretty robust campaign, "Vegas Means Business," to attract that business traveler, and we know that with the trade show visitor, there is a different spend at the destination. They might not be spending on a tour or attraction, but they might be spending more at restaurants.

Swissman: Art has a good point. The food and beverage spend is great from a trade show or convention customer. The nightlife spend, depending on the convention, is typically very strong. It's just that there isn't much free time during the day to hang out with your family or take a tour or see some other attractions around town. So it is just a kind of shifting of the wallet to other conducive outlets.

TW: Are there any differences in how MGM Resorts International's various types of properties here, or Las Vegas' varied properties in general, are performing? I know that in addition to the traditional casino-resort, you now have nongaming properties. And the market segments range from a Circus Circus to a Mandarin Oriental.

Swissman:
I would say that there's not so much a spread between the gaming and the nongaming as there is between the different categories of properties that we own. I'm sure that's something that has been talked about and studied for a long time -- that sort of compression that the properties at the lower end of any price category feel as people tend to get more competitive with room rates. Although it's not as bad as it's been in years past, that's still something that every property at the lower end of each price category experiences, that they're always the last to feel the effects of a rebound. It's more of a price thing than a gaming/nongaming type of thing.

TW: Alix, I wanted to ask you something similar about Pink Jeep Tours, celebrating 50 years in Sedona, Ariz., and 10 years here in Vegas. Differences?

Alix ReedReed:
They're very different. Sedona is 80% direct, and Las Vegas is 80% B-to-B. Interestingly enough, when the market kind of got soft a few years ago, the owner of Pink Jeep Tours, who basically resides in Sedona, was quite jealous of Las Vegas because Las Vegas was working so well at all the hotels, the LVCVA was working diligently on branding ideas, ways to get people back, dropping down some of the rates, working as a team with us. And we didn't lose as much business as Sedona did. Sedona didn't have extra amenities to add, they couldn't lower their room rates, they didn't have that home team, so to speak, that worked together to make a difference and make sure nobody forgot about us. I have to say that running a tour group in this town has been an absolute pleasure, because of the great minds that run the big hotels and the LVCVA.

TW: From the LVCVA's point of view, do travel agents get any credit for Las Vegas' good numbers? And looking ahead, can you talk about your partnership with them?

Jimenez:
About 13% of visitors use the services of a travel agent. That number stabilized over the last six or seven years, but that number used to be 49% back in 1999. But it has stabilized. We don't have the 2010 data yet, but it should be around the same area. Agents are important. There's 13,000 ARC members out there. We've identified about 400 agencies that do over 500 tickets to Las Vegas a year. Those agencies are responsible for 1.2 million room nights. So that's the equivalent of the business that comes through a convention center. So the leisure team is focused on identifying those true sellers of travel. We're going after those sweet spots, sellers selling 10,000, 20,000 airline seats into the market.

We also have our certified agent program, which has been in sleep mode for the last couple of years. We're working on another program. We're nowhere near being done, so we're working on another program to support agents. But our department is very appreciative of the business that comes through the travel agent community. We're on the road educating agents; we're at res centers; and wholesalers, very robust marketing and co-op campaigns with our major wholesale companies, both OTA and traditional, driving people, driving consumers to their websites, to their call centers, to their travel agencies. I think Las Vegas, once we fully embrace the consortia concept, it's a totally untapped market.

TW: And Dolce Hotels? Do you see travel agents as partners?

Mazzone:
Absolutely. Nationally and internationally, as well.

TW: Have you reached out to them to introduce the new property at Lake Las Vegas?

Mazzone:
There is definitely a campaign to introduce them to the new product, and it's ongoing.

TW: Are you doing aggressive discounting or marketing to reintroduce this property?

Bertone:
We're doing one of the things that we felt was really important for us to do to embrace the community, and that is to put out local community Nevada rates. It's $89, and then from a group perspective, we are kind of all over with our rate structure right now. We have great base business on the books, and our rates are anywhere from $119 to $169 per night right now, and that will change of course with the summer months. I think it's a good way for us to break in, because a lot of people don't know who Dolce is, and of course with reopening we will constantly be referred to as the "former Ritz-Carlton in Las Vegas." [Laughter] So we're definitely being aggressive. I think it's great that we are now able to offer a great product that is more approachable and reachable for people who weren't able to use the facility previously.
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