The San Francisco Giants partnered with sports marketing agency Pivot to help save money on parts of its team travel cost.
Pivot will book all of the Giants’ hotel stays for the 2021 Major League Baseball season as part of the pact. The firm doesn’t charge the Giants a fee and makes revenue in the deal by sharing 7% to 10% with hotels on the room-only rates. Sports clubs spend over $1 million just on hotel rooms, and Pivot says it can save teams up to 10% on yearly costs.
In an interview with CNBC on Monday, Mario Alioto, Giants executive vice president of business operations, said the pandemic forced the team to rethink its business operations including team travel strategy. Alioto added the Giants are already forecasting savings this season by adding Pivot.
“The pricing has been better than we thought,” Alioto said. “I think it’s going in the right direction. They can get us better rates and frankly, in some cases, better [hotel] properties.”
MLB teams say they suffered losses in 2020 due to the pandemic, as fans were not allowed in stands and its season shortened to 60 games. Los Angeles Dodgers CEO Stan Kasten told CNBC in October it would take years to overcome more than $100 million in losses the club suffered. In December, the Associated Press reported MLB clubs are suing insurance companies to recover from billions in losses.
“We like to control as much as we can in-house, but in this case it felt like it made sense to outsource part of our team travel,” Alioto said. “It takes a lot of time to negotiate with a numerous [hotel properties]. It saves us money over time, and we are also more efficient with our own time internally.”
The Giants are the first Major League Baseball team Pivot added. The company was founded in 2013 and has active partnerships with National Basketball Association teams, including the Brooklyn Nets, Los Angeles Clippers and San Antonio Spurs.
Pivot also has divisions that include brand marketing, college naming rights and competitive video gaming. Travis Wade, vice president of Pivot’s travel division, said other “huge deals” with pro teams are in the works but couldn’t reveal clubs due to active discussions.
“We built a foundation in three years with an incredible client base,” said Wade, the former Spurs’ equipment manager. “This is a unique niche market. We classify in that small unique niche: a travel agency that comes from game experience, not just hotel background.”
Wade said the firm is also seeking a $25 million raise to expand its white-glove service, advertisements, and build a mobile app for clients.
“This is not just for an angel investor,” Wade said, mentioning the “tech dynamic” Pivot wants to establish for its travel division. “And that is something that will scale because of our unique relationships that we’re able to bring on.”
The hotel industry was one of the hardest-hit sectors due to the pandemic. The American Hotel & Lodging Association estimates that half of all U.S. hotel rooms will remain unoccupied in 2021 as Covid-19 impacts continue to linger. According to the Labor Department, hotel-related hiring did total 36,000 in February, showing signs the travel industry could be picking up.
“Nine out of 10 travel agencies are dying out right now in a pandemic, but we are thriving because our clients are traveling,” Wade said.