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Casino resorts have traditionally enjoyed high occupancies from their rooms business, either from occasional gamblers taking a short break or from more regular high rollers whose spend on the game floor makes a comp room a good business decision.
But in 2020 that has turned on its head. Regional casino resorts – those outside of Las Vegas – are now looking at adapting their business models to target new channels and new segments, while also reconsidering their comp/cash strategies.
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If your casino resort relied heavily on an older demographic, then business is possibly down for 2020. Likewise, if you relied on travelers flying into your destination, business levels are likely down.
Instead, casino resorts need to be looking at their local drive market and considering new distribution channels in order to widen their guest demographics.
“A lot of regional casinos are not on Expedia or Booking.com. Those are easy channels that they can get on to be discovered by new organic guests. You won't necessarily be able to continue to use the same guest as before, depending on what area you're located in, so that is one good way you can get into new channels,” advised Daniel Lofton, Duetto’s Director of Hospitality Solutions, Americas, and one of our team of casino experts.
Casinos also need to rethink their comp/cash strategies, and better understand customer value.
“A lot of casinos don't adopt a hybrid comp/cash strategy. The guest is either completely complimentary, i.e. they get a completely free room, or they get a completely retail-rated room with no incentive whatsoever. A hybrid comp/cash strategy finds the middle ground. For example, your guest doesn't qualify for a free room on this particular trip but they shouldn't pay the full retail rate either, because they are loyal and visit here all the time. We should give them a good discount,” said Lofton.
Sue Murphy, Vice President Revenue Management & Distribution, Penn National Gaming and Hollywood Casinos, is a Duetto customer using the hybrid comp/cash strategy.
“The Duetto system allows us to offer a yielded rate by room type. With other solutions it’s either you comp your rooms or you have them yielded at a cash rate that will probably have upgrade charges. But with Duetto we can offer the guest a comp room or say that they can pay $50 extra if they want to get a suite. And that’s great,” she explained.
Ben Koff, Founder of Hidden Upside, also believes casino resorts should be reconsidering their comp room strategy.
“It can come to a decision to focus on the comped guest for long-term gains over a quick dollar. Operators need to decide what are you going to reward: the cash that might not be consistent, or the gaming which is better barometer of guest worth.
“A big question here is do you need to create a rate ‘bottom’ to manage brand integrity? The central tenet of every incremental dollar is a short-term strategy that gets money now but are the customers at odds with your base clientele in the long terms?” he said.
When it comes to room rate strategies, Koff has seen some positive trends.
“Two big growth gainers I’ve seen are the ability to upsell better room types and an increase in room service. While patrons might not have a problem sharing a gaming space, there is a greater desire seen for better rooms and in-room dining,” he explained.
For Dave Rossi, Director of Resort Operations at Eureka Casino Resort in Mesquite, NV, the focus has been on operational efficiencies and sanitation.
“We have implemented new sanitation standards and created a new department called the Clean Team dedicated to cleaning visitor areas in our casino. Also, we have closed several departments that were not major revenue generators (spa, poker) and focused on efficiently operating our core departments such as the casino, rooms and F&B,” Rossi said.
These tactics have helped the casino resort deduce its operating costs and enabled it to also operate as efficiently as possible.
From a revenue standpoint, like many Duetto customers, Eureka Casino Resort has seen a much shorter booking window.
“We are utilizing Duetto's quick rate changing abilities. Duetto is great for adjusting rates for different room types and we also utilize this feature often,” he said.
Whether adopting a new hybrid comp/cash model or protecting the bottom line with operational efficiencies, the outlook does remain positive for casino resorts.
With many other recreational activities still closed, the gaming floor is still proving a much needed escape for many, as Koff explains. “People will always want to gamble. Despite the reductions in occupancy for gaming, there has always been capacity to accommodate larger crowds – so the reduction in gaming positions hasn’t decreased the ability to handle the gaming demand. Also, as so many other travel and entertainment options have been curtailed, the casino resort – especially a local one – provides an integrated vacation experience without the hassle of flying,” he remarked.
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