Research Library

Why Expansion Projects Falter

Several years ago a casino embarked on a significant expansion of its gaming floor as well as non-gaming amenities, including new restaurants, movie theatres and a showroom. First it hired a reputable firm to conduct a feasibility study to determine if the project and all of its components were feasible. The consulting team that authored the feasibility study analyzed the local and drive-in markets, addressed new cachement areas, conducted demographic and psychographic analyses of those markets, determined which segments of the population in those markets would be attracted to the new amenities and prepared its forecast. The feasibility study also addressed future amenities, including a hotel and retail outlets, and advocated the development of a master plan.

Leadership used the feasibility study to secure financing for the project. They then assembled a design team including an architect, engineering firm and interior design specialists to build the facility along with in-house professionals from operations, entertainment and marketing to manage the opening and subsequent operation of the expansion.

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What Makes a Casino Comfortable?

What makes a casino comfortable? While this may sound like a simple question and whose answer may seem obvious, it is rarely asked during the design process of a new casino or the renovation of an existing one. Nor is it a particularly easy question to answer. To some, a comfortable casino is one that has a down-home feel. To others it may be a casino that provides an environment that is exciting and energetic. Still to others, it may be nothing more than a place where customers are greeted by friendly and happy employees. In reality, a comfortable casino is comprised of a variety of elements including sound casino design, quality engineering, employee training in customer service skills and a healthy dose of common sense.

In the early days of Indian gaming, comfort was often overlooked in the rush to build and open properties as quickly as possible. As casinos became more popular, operators added more machines to existing space or expanded their properties in order to accommodate as many customers as possible. The notion of customer comfort played a secondary or even a tertiary role in the operation of the business. What has evolved for many casino operators are properties that are decidedly uncomfortable to be in.

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What Players Really Want

Understanding the wants and needs of gaming customers has long been the mantra of the most progressive leaders in the gaming industry. Collectively, casino operators in the United States have conducted thousands of focus groups and interviews with casino customers in order to understand how to make gaming experiences better. Spurred by the input of their customers, casino managers have undertaken customer service initiatives, increased training in customer service, developed host programs and invested capital in improving the service delivery process. Yet despite these efforts, most casinos have ignored the one complaint that most irks casino customers: tight machines.

Research has long indicated that what customers seek most in their gaming experiences is “time.” Gamers visit casinos for a variety of reasons including socializing with others, escape from the mundane, recognition and excitement. What they ultimately seek is a diversion from their normal lives. Casinos offer environments that are dramatically different and customers want to
spend as much time as possible in those environments before going back to their regular world. While every customer would like to leave a winner, for virtually every customer, gaming satisfaction is measured not by how much money they have in their pockets at the end of the day, but by how much time they spent in the casino before they extinguished their budgets and went home.

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Rising Gas Prices and the Possible Effects on Casino Visitation

The steady rise in gasoline prices over the past year and the possibility of further increases in the near future is a growing concern among gaming executives as well as financial analysts that watch trends in the gaming industry. While casinos in a number of jurisdictions have recently enjoyed steady increases in visitation and gaming revenue, the question that is on many peoples’ minds is, “how will rising gas prices affect the gaming industry?” The question is of particular concern to managers of Indian casinos since the majority of Native American gaming operations are located outside of metropolitan areas in rural locations that require patrons to drive further and expend more fuel than if they were to participate in other entertainment options closer to home.

A recently completed survey by a research company in Nevada attempted to gauge the effects that rising gas prices will have on drive-in traffic from Southern California. The study noted that 48 percent of respondents said higher gasoline prices would deter them from planning vacations to Las Vegas and that 57% said fuel costs are affecting their decisions to go on weekend trips. At first blush, the results of this survey would cause casino managers in all US jurisdictions to be concerned. However, the Las Vegas Sun newspaper reported that as gas prices rose earlier this year, auto traffic to Las Vegas increased. From January to August of 2005, gasoline prices in California increased by 40% but auto traffic on Interstate 15 at the Nevada-California
border increased by 30%. Las Vegas continues to enjoy historically high levels of visitation and gaming revenues. Even with gas prices hovering at $3.00, people continue to drive into the city from Southern California for gaming/entertainment vacations.

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The Benefits and Challenges of Master Planning

Most casino owners, whether they are tribal entities, public corporations or individuals, have a vision for what they want their casinos to be. Transforming that vision into bricks and mortar requires a master plan. The benefits of master planning are obvious but the challenges and obstacles in the planning process are numerous and often difficult to overcome. This article explores those challenges and offers suggestions on overcoming them.

The master planning process is complex. It relies on a keen understanding of trends in the marketplace, the changing needs of consumers, actions taken by competitors, a certain tolerance for risk, access to capital markets as well as a healthy dose of gut instinct and intuition. When done right, a sound master development plan will allow the tribe’s gaming enterprise to grow and flourish, providing jobs to the community and a steady stream of revenue to meet the needs of the tribal government.

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Be The Best Locals Casino You Can Be

As casino markets mature, there is a propensity among gaming operators and, in particular, Indian tribes, to diversify their businesses away from simple casinos. For some, the logical next step in the development process is to build full scale resorts, complete with golf courses, spas, elegant hotel rooms, ultra lounges and other amenities that appeal to new and different
customer segments. The basic assumption is that the local gaming markets are reasonably served and, in order for revenue to grow, a tribe must bring in new, different and far wealthier tourist segments.

The fundamental problem is that resort hotels are expensive to build and difficult to operate. They require a highly trained staff and an experienced sales team. A resort hotel stands a better chance of being successful if it is located within a resort community but that often means they must compete with branded hotel chains with international reservation centers. In addition, a resort hotel may alienate the very customers that made the casino successful as it often holds little appeal to local gamers.

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E-Marketing to Casino Customers

Email and the Internet have quickly become an integral part of the lives of most Americans. Most readers of this publication rely on the Internet and e-mail for daily communication with both friends and business associates. This behavior is no different for the general population.

Currently, it is estimated that 61.2% of adults use tl1e Internet regularly. While it is generally assumed that younger age groups comprise the bulk of Internet users, usage among older demographic groups has increased significantly. Today, the 47% percent of the US population over the age of 50 uses the Internet regularly and their usage rate is increasing faster than younger demographic segments. In 2000,45.8% of people aged 55-64 used the Internet. In 2003 that number jumped to 56.7%.

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Designing Effective Prospect Mail Programs

Casino operators have long understood the importance of using mail to communicate to various segments of their player databases. Direct mail has proven to be the most effective tool in the marketing arsenal to foster loyalty and encourage repeat visitation. However, direct mail can also play an important role in reaching prospective customers who have not yet visited the casino property.

The notion of using direct mail as a prospecting tool has long allured casino marketers. If designed correctly, the effectiveness of prospect mail programs can be accurately measured and
the end result can lead to a cadre of intensely loyal gaming customers. However, just like other forms of advertising media, without an understanding of the hazards inherent in prospect
mailing, the casino risks wasting precious marketing dollars and alienating its existing customers.

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The Best Way to Communicate With Your Customers

When conducting market assessments or feasibility studies for casino expansions, researchers often carry out qualitative research in the form of focus groups in order to gain a better understanding of the needs of the market. While not a primary objective of the focus group research , the effectiveness of advertising is often included as a secondary topic.

Researchers include this topic to better clarify any proposed marketing strategy that may be part of their market assessment. Advertising is a significant expense for any casino, particularly
for those properties that are about to introduce new gaming, dining, entertainment, lodging or other amenities. As such, researchers need to have an understanding of the advertising
tools that are most effective. A common question that researchers pose to casino customers in such settings is, “what is the best way a casino can communicate to you?” Invariably,
the answer is always the same. Mail is the most effective tool in the casino’s advertising arsenal to communicate with its customers.

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Casino Restaurant Pitfalls

It is a common sight. Tt is 8:00p.m. on a Thursday night and the casino is busy. Machine occupancy is at 60%; most of the table games are open but the restaurants are nearly empty. The buffet had a short line an hour earlier but the coffee shop is quiet and one of the waiters from the gourmet room is standing in front of the restaurant, rocking on his heels. His dining room is empty.

When this situation becomes evident to senior leadership and they ask for reasons why their restaurants are not busy, there is usually no shortage of finger pointing. The food and beverage director will complain that marketing does not give his restaurants enough advertising support. The casino manager will mention that his customers tell him that the restaurant prices are too high. Other managers who dine in the casino’s coffee shop will say that they see better quality and value at other restaurants in town and the service seems slow. More often than not, the solution is to discount the meals.

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