Research Library

The Challenges of Developing a Casino Resort

Posted on November 16, 2006

Over the past fifteen years the Indian casino industry has evolved and so too have the individual properties that make up this industry. Many of these casinos have evolved from simple gaming operations housed in temporary structures to regional gaming entertainment centers, and some have succeeded in evolving into lavish full-scale resorts. While the evolution of a casino into a regional gaming entertainment center is often a natural and progressive form of casino development, the creation of a true casino resort is often a difficult, expensive and risky process. There is, in fact, a wealth of problems facing any casino operator that attempts to make the transition from a local oriented casino to a full-scale casino resort.

When conducting a market assessment for an expansion of a casino into a resort, consultants examine a number of variables including 1) the location of the proposed resort and
its ability to support this kind of development, 2) the expected demand for a resort from primary feeder markets, 3) the proposed quality level of the resort, 4) the kinds of amenities
that will support the resort experience, 5) the size of the proposed resort and the size of its related amenities, 6) the relative strength of the competition and 7) the ability of casino
management to effectively manage a full-scale resort operation. Misreading any of these variables can doom the project.

View Full Article Read More

The Changing Role of the Casino Hotel

Posted on October 16, 2006

A hotel addition to a casino has long been recognized as an important amenity for any local casino that seeks to evolve into a regional gaming and entertainment destination. A hotel allows a casino to be more than just a daytrip destination. A well designed and well maintained hotel that is effectively marketed can generate a substantial amount of profit as a stand-alone revenue center. Also, the hotel allows the casino to generate incremental revenue through casino marketing programs.

Traditionally, hotels were developed at casinos as standalone profit centers where a portion of room sales (normally 20%-30%) were allocated towards casino marketing and the remainder sold to transient, group and commercial segments. However, this business model is changing. Casino operators have begun to realize that hotel rooms can be used to overcome locational disadvantages and drive greater revenues into the casino. The trend is to allocate a far greater percentage of hotel rooms to casino marketing, which are then offered to various segments of the database through demand stimulation programs.

View Full Article Read More

The Changing Face of Casino Marketing Programs

Posted on September 16, 2006

Casino marketing plans have long been built around several basic programs. However, technological advances are subtly changing the traditional casino marketing mix. The ultimate winners will be those casinos that not only embrace these new technologies but learn to harness it to build a sustainable competitive advantage.

Since the mid 1980s casino marketing was comprised of several player benefits built around the casino management system (CMS). Casino management systems have evolved from slot accounting systems with rudimentary player tracking modules to more complex systems that are capable of rewarding a wide array of player benefits.

View Full Article Read More

Striving for the Highest Standards in Casino Design

Posted on August 16, 2006

Indian casinos now dot the American landscape. They can be found in such diverse places as Wyoming, New York and California. Architecturally, these casinos range from stunning resorts that rival the most beautiful casinos in the world to modest facilities that were built as temporary gaming venues. Unfortunately, it can be the latter that defines the expectations of customers when they think of Indian casinos. The question that must be asked is, “why does an industry with some of the highest operating margins of any segment of the hospitality industry offer its customers gaming environments that are not always the most attractive or comfortable?”

It is important to understand Indian casinos in a historical context in order to appreciate how many of these gaming properties were developed. Wid1 the passage of the Indian Gaming Regulatory Act in 1988, tribes were able to open casinos. However, many states’ governors were unwilling to negotiate compacts with tribes or chose to severely restrict the types of games that could be offered.

View Full Article Read More

Ten Ways to Make Headline Entertainment Profitable

Posted on July 16, 2006

As the price of headline casino entertainment grows, a loud but vocal minority of casino executives have begun to question the expense associated with entertainment. These people tend to be the financial professionals within the casino organization who believe that such programs should be measured. They may also be of the belief that casino headline entertainment programs seem to exist solely to fund the retirement programs of aging rock stars who, like most baby boomers, neglected to properly plan for their golden years and are now forced to work extra hard while they still retain some marketable skills. This article is not for those naysayers but is written for those that must justify their entertainment programs in the wake of what may be sound logic and reason. Skeptics are asked to ignore this article. Those that must justify their entertainment programs are invited to read on.

There are ten simple steps that entertainment and marketing executives can take to better justify the expense of headline entertainment. By following these suggestions entertainment programs will always make money despite what may be revealed in property profit and loss statements.

View Full Article Read More

The Coming of the Entertainment Superstore

Posted on June 17, 2006

Casino development in Las Vegas has historically acted as a bellwether for the development of gaming and nongaming amenities in regional markets. Development trends such as the multi-station buffet, multiple dining options, casino food courts and showrooms were first introduced in Southern Nevada and eventually exported to other markets. Casino developers in regional markets have traditionally looked to Las Vegas to see what works and what doesn’t work; what is particularly appealing to gamers and what is not and adopted those development trends that hold the greatest promise.

While Strip properties often offer the most glamorous of amenities, it is Las Vegas’s locals casinos that have developed amenities that are most relevant to casinos in regional markets. Beginning with the opening of Sam’s Town Casino in 1978, followed by the Gold Coast Casino, the whole concept of a locals casino was first developed in Southern Nevada along with the suite of amenities that held appeal to local gamblers.

View Full Article Read More

Designing the Right Amenity Mix

Posted on May 16, 2006

When leadership decides to commit to an expansion of its gaming facility or a wholesale replacement of its casino, the first step is to determine the proper size of the proposed gaming operation. This exercise involves examining the current utilization of the existing facility, the size of the primary and secondary markets that the casino will serve and the gaming behavior of those markets. While not a precise science, determining the right number of gaming devices, table game positions and casino square footage is based on proven mathematical models. Although
complex, these models can accurately determine the proper sizing of a casino.

The next step is to determine the appropriate mix of nongaming amenities that will support the gaming operation in order to maximize gaming revenue. Non gaming amenities are most often comprised of restaurants, hotel rooms, meeting and banquet facilities, entertainment venues, retail outlets and leisure/recreation operations such as golf courses, movie theatres, nightclubs, bowling centers, arcades and child care facilities. While determining the right amount of hotel rooms and banquet/meeting facilities is primarily an empirical exercise, identifying those other amenities that will maximize gaming revenue and best meet the needs of the market requires far more investigation.

View Full Article Read More

Build Your House Out of Bricks

Posted on April 16, 2006

About fifteen years ago, Steve Wynn, then CEO of Mirage Resorts, gave a speech to an audience of alumni and students at a prestigious college of hotel administration. He began by reciting Grimm’s fairy tale of The Three Little Pigs. At first the audience collectively laughed as Mr. Wynn began his recitation but it soon became evident that Mr. Wynn was to recite the entire fable. And so he did.

Mr. Wynn later explained that the lessons taught in this fairy tale were important to the hospitality industry and equally applicable to casino developers as to children. Build a house out of bricks rather than straw or wood and you will be able to weather any storm or wolves that threaten your house. Since its opening in 1989 the Mirage withstood the introduction of more than a half dozen new competitors. Fifteen years later the Mirage continues to compete with the best properties in Las Vegas. In the coming months the Mirage will introduce new nightclubs, restaurants, a Beatles themed Cirque du Soleil show and an improved volcano attraction. Room rates and slot win per unit have and continue to remain well above the market average. After all,
the property was built out of bricks.

View Full Article Read More

Change is Bad, Change is Good

Posted on March 16, 2006

Not too long ago a casino operating in a very competitive market made a decision to replace its aging casino management system. Property leadership defined their user requirements, evaluated a number of competing systems, narrowed their list to two vendors and ultimately chose a system that best met their needs.

The new system afforded the casino the opportunity to redesign their player rewards program and leadership saw this as an opportunity to create a rewards program that was superior to their competition. To best meet the needs of the market, casino leadership first conducted a series of focus groups with people who gamble in local casinos. Concurrently, they examined their competitors’ reward programs. Property managers then decided on a new rewards program and tested the concept with loyal, premium players in the form of “blue ribbon panel” discussions.

View Full Article Read More

Taming the Marketing Beast

Posted on February 16, 2006

In the world of hospitality and tourism, casinos are unique animals. They are far often larger than traditional hotels, offering more rooms, restaurants and amenities than most resorts or convention hotels. Yet despite their shear size, what differentiates casinos most is their copious consumption of marketing dollars. And while some casinos are efficient users of marketing dollars, others act more like large beasts, with a ravenous and unending appetite.

A casino that is a marketing beast is characterized, first and foremost by a never ending need to spend money in order to drive traffic through its doors, ostensibly to keep the slot handle up. Typically, a marketing beast is a casino in which there is a marketing promotion or program in effect virtually every day of the year. Bus marketing programs, monthly large drawing drum promotions, daily tournaments, midweek promotions, an endless parade of merchandise giveaways, and of course, copious amounts of direct mail offers are used to feed the beast. Often these promotions are layered on top of each other with customers coming in and redeeming multiple offers on the same visit. It is as if management is afraid that, without these marketing programs, the flow of business will immediately stop and the beast will collapse. So, to keep the beast alive, money is spent. Empirically, a beast can be defined as a casino that spends in excess of 25% of its revenue on marketing and

View Full Article Read More