Operations

Asia: Seven Steps to Success

Posted on July 27, 2012

Call it the Macau/Singapore effect.

The initial success of integrated casino resorts in Singapore, coupled with the unprecedented growth in gaming revenues in Macau, has attracted the interest of government policy-makers in
countries throughout Asia. Several are now considering instituting new policies that will permit the expansion of casino gaming in their countries in the form of what is now being referred to as integrated casino resorts, and with it, both economic and tourism growth.

The success of Asian resorts has helped identify those factors that are critical to the success of any new gaming venue. Here are seven factors that are critical to creating a successful gaming policy that grows tourism, enhances tax revenues and acts as an engine for economic growth.

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The Golden Age of Free Play

Posted on February 27, 2012

A considerable amount of debate has occurred over the costs of free slot play, how to account for it, measuring its impact on profitability, calculating its effect on slot hold and other metrics. What has not been explored are the hidden benefits of free slot play.

Indeed, free slot play can have a profound and positive impact on customer satisfaction, the casino’s profit an loss statement and even the privilege taxes the casino pays on gaming revenue. The industry may in fact be in the midst of a golden age of free play—an age that may soon vanish. Until that time, customers, casino leadership and even the gaming organization’s chief financial officer can enjoy free play’s hidden benefits.

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Don’t Shoot the Messenger

Posted on June 16, 2009

The recession of 2008-2009 has touched nearly every facet of American business. Indian gaming has not been immune from the sudden drop in consumer spending, which followed a rapid rise in fuel prices last summer. Nearly every US gaming market and the vast majority of casino enterprises operating in those markets saw declines in gross gaming revenue and net income, coupled with lower operating margins. Tribal governments in turn saw precipitous drops in revenue derived from their gaming operations and have been forced to reduce spending on essential services such as health care, education and elder care.

The sudden drop in the gaming revenue stream caught many tribal governments by surprise. Since budgeting often takes place in two to three year horizons, it quickly became difficult for many governments to meet their ongoing commitments. Unable to fully fund essential services, governments turned to their business enterprise boards who in turn looked to their casino management teams for solutions to very large and ultimately global business problems.

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A General Managers Eye View of the Casino

Posted on January 7, 2008

Few people in the gaming organization can appreciate the view that the property general manager has of the casino. Unlike departmental managers, whose primary concerns center on the effectiveness of their departments and how their staff interacts with others, the GM sees how all of the departments interact.

While departmental managers may believe that their department should receive precious capital dollars over others, it is the general manager who truly understands how to prioritize the allocation of capital in order to best meet the needs of the organization. The slot director may sincerely believe that new gaming devices are the most important purchase that the casino should make, the security director may need additional surveillance equipment in order to preserve the safety of gaming patrons, and the information systems director may need new hardware to allow for fault tolerant data processing. Each of these managers believes their needs are most important.

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Time is the Enemy of the Player

Posted on August 17, 2007

Not long ago the leadership team of an Indian casino near a major metropolitan area made a strategic decision to attract premium Asian-American table game play. With a clear mandate that the tribe wanted this initiative done correctly, the general manager instructed his marketing team to thoroughly research the value of this gaming segment, identify the amenities and marketing programs necessary to attract and retain this segment and to develop an implementation plan.

The marketing team did an admirable job. They first retained a consulting firm to estimate the size of the market’s premium table game market. They conducted focus groups in the primary feeder market. They flew to Las Vegas and met with colleagues who operated premium table game rooms at Strip hotels. They even sent a member of the team to Macau to see how premium table game operations were conducted in Asia.

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Adherence to Leadership Principals

Posted on July 21, 2007

Many gaming organizations have come to understand the importance of operating with consistent principles of leadership. The notion is simple: all managers need to adhere to standards of leadership so that all employees know what is expected of them and what the consequences may be if they choose not to meet those expectations. To this end, managers are taught how to communicate expectations, follow up when expectations are not being met, counsel employees and, if necessary, discipline them. Gaming organizations often go to great lengths to teach managers how to lead in a consistent manner, employing outside consultants or developing leadership training programs in house.

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Making Nightclubs Work

Posted on May 16, 2007

For years casino operators from around the world have looked to Las Vegas in order to spot emerging trends that could be adapted to their markets. The opening of Caesars Forum Shoppes in 1993 inspired other gaming operators to add shopping malls in order to broaden their reach into new markets. For example, the Viejas Casino in Alpine, California and the Horseshoe Casino in Bossier City, Louisiana developed stunning factory outlet malls to broaden their appeal and casinos in Atlantic City developed first-class shopping malls appurtenant to their casinos.

The more recent phenomenon of so-called “celebrity chef” and “eatertainment” restaurants in Las Vegas inspired casinos in regional markets to also add locally and nationally recognized restaurateurs to their food product offerings. Mohegan Sun features a restaurant by Boston-based Todd English, who opened Olives at Bellagio in 1998 and dozens of casinos now feature nationally recognized brands such as Ben and Jerry’s, Hooters and Wolfgang Puck Café.

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What Can We Learn from Macau

Posted on April 17, 2007

As gaming markets mature and individual casinos’ databases become established, casino operators are able to better understand the demographic makeup of their core customers. With few exceptions many Indian casino operators have come to recognize that Asian Americans, in particular immigrants from China, make up a sizable minority of their customers and display an almost passionate love of casino gambling. To better serve this important segment, many casinos have introduced noodle bars, expanded Asian food offerings in their buffets, added Chinese speaking hosts and printed collateral material in various Asian languages. Some have also brought in Asian entertainers. While these programs make sense, they are essentially tactical plans that
are put in place on a hunch rather than understanding that player segment’s wants and needs. They fail to recognize that not all Asian American gamers are alike and each nationality has its own particular appeals.

For most domestic markets, Chinese Americans are the most dominant Asian gaming segment. Notwithstanding some markets may be comprised of other nationalities. Therefore, it is critical to first understand which Asian nationalities comprise the largest part of the casino’s demographic mix. If Chinese Americans are indeed the largest, then it is important to understand their unique wants and needs. And to really understand what motivates Chinese gamblers, you have got to go to Macau.

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White Paper: An Analysis of Harrah’s Total Rewards Player Rewards Program

Posted on December 17, 2006

Harrah’s Entertainment’s Total Rewards Customer Loyalty Program’s (“Total Rewards”) basic structure is a tiered program. Unlike the vast majority of casino reward programs, players do not earn bonus points. Rather, they earn a combination of Tier Credits and Reward Credits. Tier Credits are used to determine one’s ranking while Reward Credits are used for comps and other purchases.

When a player inserts their card into an electronic gaming device, the LED display shows the customer’s name, the number of Tier Credits accrued over the course of the calendar year and then the number of Reward Credits that are available for redemption.

Total Rewards offers four tiers, the highest level being 7-Star. The following table details the number of Tier Credits, earned on coin handle that must be earned within a calendar year in
order to advance to each tier.

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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.

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