Provider gambles on Las Vegas, wins big

Monday, October 31, 2005

LAS VEGAS - At last count, Las Vegas had more than 131,000 hotel rooms to accommodate the throngs that flock to the gambling mecca each year, and many of these visitors need medical equipment.
Bryan Schultz recognized this opportunity and parlayed that bet into a six-figure jackpot. Now the sky's the limit, he says.
Considered the "go-to" source for scooters, wheelchairs and oxygen by many of the city's major hotels, Schultz's Desert Medical Equipment is a familiar logo on the Strip. Among his clients are the Bellagio, Caesar's Palace and Steve Wynn's new mega-hotel-casino complex. Most of his business is short-term rentals to hotel guests and it's strictly cash - no Medicare whatsoever.
"People who travel to Vegas, they come to get lost," Schultz said. "They don't want to bring their equipment with them, so we provide it through the hotel, which has it waiting for them when they arrive."
Schultz, in his second year as head of his own company, has been mining the resort rentals market for about seven years, since he worked as a sales rep for local HME provider InterWest Home Medical. He continued to develop that business for subsequent providers, OptionCare and Mesa Medical, before going out on his own. He now counts InterWest and OptionCare among his biggest competitors.
"They give us a run for our money," he said.
And the money is substantial. Schultz reports his company earned a profit in its first year due to the rentals business, which he figures totaled more than $400,000. He expects to double that volume this year.
The key to building the business, he said, is in landing supply contracts with the hotels - preferably an exclusive arrangement. Schultz has managed to secure these agreements by building relations with concierges and guest services managers over the years. The sell, he said, is in showing them how his service makes the hotel look good.
"This is a service they can add as yet another benefit for their guests," Schultz said. "All I ask is for a chance to show how our equipment and service set us apart. We use premium brands and provide delivery whenever they need it. Vegas is 24 hours, and so are we."
A member of VGM & Associates, Schultz gets referrals through the Waterloo, Iowa-based network, as well as from the Las Vegas Chamber of Commerce, Tourism Bureau and international travel agencies. The company also has contracts with various local condominium associations.
Although Schultz has a basic formula for calculating how much equipment he needs to serve this burgeoning clientele, his conventional standard of five units per every 1,000 rooms is quickly becoming obsolete due to the astronomical growth going on in Vegas over the past few years.
"It's gotten to the point where we can't accurately predict it anymore," he said.
Because his clients don't receive (or ask for) a stipend for the equipment rentals, Desert Medical gets a full cash return on its equipment, which includes scooters, power wheelchairs and oxygen. Starting with 25 scooters, Schultz's inventory is now at 200 with another 50 more on the way.
This kind of growth and return on investment appears to have made resort rentals a highly competitive business in major tourist areas such as Orlando. When contacted about medical equipment options for guests, Disney's Contemporary Resort recommended two local providers, neither of whom wanted to discuss their strategies for publication in HME News.
"It is an extremely cutthroat business around Orlando," one provider said. "The less we say about it, the better."
Another Orlando provider declined to be identified because he is already inundated with phone calls from inquirers around the country wanting advice on how to get into the business.
Similarly, the Ozark Mountain resort area of Branson, Mo., represents tremendous business potential for local HME providers due to the large number of elderly visitors to the area. Mike Osborn, manager for Home Medical Supply in nearby Springfield, says providing oxygen equipment to hotel guests has historically been a nice niche, but the company hasn't aggressively pursued the business. Competition for mobility rentals, on the other hand, has been fierce among several companies, he said.
One major resort in Wisconsin Dells, a popular Midwestern destination, furnishes its own scooters, but a representative said any guests wanting more sophisticated equipment like power chairs or oxygen "need to make their own arrangements" and didn't recommend any local providers.
As lucrative as the rentals business may be, it's not without its headaches, Schultz said.
"Keeping track of the equipment is a challenge," he said. "We're constantly renting it out, and it can be tough to locate every piece that's out there. And just like any rental, people abuse it because it's not theirs."
Liability is another major issue and a condition that hotels stipulate in their agreements, Schultz said.
"We have a huge policy and it's our biggest expense," he said. "We add all our hotels as secondary insured on the policy. The good news is that I've only had two lawsuits in two years and both of them lost."