A Strategy for Spend

Identifying and rewarding non-gaming spend to determine player value continues to be enhanced throughout the industry

In the past decade, the issue of tracking non-gaming spend in casinos has gone from a peripheral cosmetic luxury for operators to an integral, strategic part of revenue management. As part of that transition, recreating the “new” player value identified with non-gaming spending has forced the industry to take a new direction, especially with a younger generation that is focused more on retail than the roulette wheel.

“We hear a lot about the need to expand the industry’s reach among millennial audiences, and converging non-gaming casino experiences with gaming activities is a powerful mechanism to do so,” says Tom Soukup, vice president of research and development for Konami Gaming. “Millennials exhibit the strongest non-gaming behaviors, trending toward social activities and experiential luxury resort incentives.”

Tracking Trends

To meet this changing demand, Konami offers its Synkros casino management system, which delivers actionable non-gaming data analysis through business intelligence tools within Konami Enterprise Intelligence (KEI).

“It truly gives a 360-degree view of patron worth, enabling operators to make business decisions that impact their entire operation, from customer service to player reinvestment,” says Soukup. “Synkros empowers operators to track, target and convert those markets by appealing to the core pursuits and desires that drive them to the property. Our system is able to pinpoint all the varied facets of carded customer groups so operators can appeal to the unique preferences based on past behavior. Ultimately, operators can make better decisions when armed with a more complete picture of each patron’s total worth.”

Identifying total worth is what the industry revenue management consulting firm Duetto has done with its appropriately named product, GameChanger. It is a web-based application developed exclusively for casino hotels. Staffing a team of highly experienced gaming professionals at its Las Vegas office, Duetto aims to help casino hotels leverage cutting-edge advances in technology and change the way they approach revenue management, especially for non-gaming guests.

GameChanger ensures casino hotels select and retain their most profitable customers, accounting for dynamic demand, occupancy and segment lines, assessed by each individual customer segment, room type, offer or discount.

“Our role is to fundamentally change how player guest value is identified, because it all goes to the casino hotel’s bottom line,” says Patrick Bosworth, cofounder of Duetto.

Operational Mandate

MGM Resorts International began awarding tier status based on both gaming and non-gaming spend in 2011. Since then, the operator has logged a steady increase in the rate of tracked non-gaming spend such as shows, concerts and nightclubs, as well as engagement with their player rewards “M life Moments,” exclusive experiences available only to M life members.

“In 2013 we introduced an important technological advancement to help members,” says Josh Swissman, vice president of loyalty marketing for MGM Resorts International. “We use a proprietary technical application to review all hotel reservations and compare them to our M life database to ensure the member gets tier credits for all other non-gaming spend on their folio. We believe the best way to increase non-gaming spend is to make it valuable for our members.”

MGM Resorts has done this by improving the communication process, engaging employees and actively explaining the benefits of M life enrollment through multiple channels, including at M life desks and front desk upon guest check-in.

“Customers increasingly expect to have personalized communications and incentives based on their transaction history and tracked preferences,” says Swissman. “However, if you are going to collect customer preferences, you must be prepared to execute on that information throughout the entire enterprise.”

Card Control

Taking the trend of increased focus on non-gaming spend to the next level is Sightline Payments’ Loyalty Card Plus, the first gaming industry-specific prepaid card solution that allows guests a safe, secure and responsible way to enjoy gaming on and off casino properties, while allowing gaming operators to retrieve and analyze non-gaming behavior on and off the property. One of Sightline Payments’ largest clients is Golden Nugget.

“Our systems allow casinos to incentivize playing behavior by reviewing non-playing behavior, as well as issuing prepaid cards to retailers,” says Omer Sattar, executive vice president of strategic partnerships and initiatives for Sightline Payments. “It increases loyalty to the casino operator and increases their non-gaming spend once they are on the casino resort property.”

Sattar notes that a casino guest who spends $5,000 in the retail sector and $2,000 in the gaming sector during their stay is usually valued less than the guest who spends $3,500 in the gaming sector—half the dollar value to the property’s bottom line, but more value in the eyes of the casino operator.

“We founded this company four years ago to solve problems like this,” says Sattar. “Better tracking and a cashless system for operators makes for a more efficient process while identifying more opportunities to add to the casino’s bottom line with non-gaming spend.”

Value Proposition

For Konami, tracking non-gaming spend is done with the KEI Patron Worth Evaluation tool, which gathers highly configurable performance indicators to determine overall patron value across gaming and non-gaming amenities. Integrated with existing point-of-sale and hotel interfaces, the tool is able to compile a total worth score for each casino patron in the property’s database to better understand their full value, which is essential for effective and profitable marketing and service initiatives. Additionally, the data can be leveraged to KEI’s report writer and centralized dashboard to generate ad hoc reports, queries, summaries and analysis.

“With the KEI patron worth evaluation, we have built a proprietary point loyalty program that automatically calculates a monthly percentile score between one and 100 for each patron, based on a custom configurable RFM (recency, frequency and monetary) ratio value,” says Soukup.

“Collecting scores throughout all connected gaming and non-gaming activities, Synkros generates each customer’s total worth score for key business applications including market segmentation, trend analysis, tiered loyalty club programs, customer service and archival reference. This valuable player information is carried through the Synkros marketing suite and can be used to launch rewards and bonus events that target carded players based on criteria of the operator’s choosing.”

One of Duetto’s value propositions for potential clients is the ability to leverage not only hotel room spend, but also spend on non-gaming and special events like concerts and sporting events, both of which are popular with the millennial demographic.

“We are bringing the advanced technological resources and strategies that are only seen in Silicon Valley to the gaming industry,” says Bosworth. “It is a dramatic leap forward for the gaming industry, and the difference is showing up in the bottom line.”

Findings For The Future

No matter the geographic location of the casino operator, from Macau to Mississippi, or Las Vegas to Louisiana, everyone agrees that non-gaming spend will continue to gain momentum as a driving force within the industry as the millennial generation further penetrates casino floors in the United States and across the globe.

“Until recently it was very difficult to generate advanced reporting of this magnitude on non-gaming spend, let alone automate it,” says Soukup. “Now, technology makes it available in real time so operators have the most accurate and up-to-date information upon which they can rely to identify and capitalize on opportunities. Everyone is more conscious than ever about the potential value of non-gaming analytics, but as awareness grows, specialization will follow, and it becomes more competitive for casinos to connect with customers in ways that are unique, targeted, personal and authentic.”

MGM Resorts International is already doing this through its M life program.

“The future of tracking non-gaming spend is to have a deeper relationship with the member through strategic partnerships like the ones we currently enjoy with Hyatt Hotels, Royal Caribbean Cruise Lines and Southwest Airlines,” says Swissman. “We have also seen great success by launching the myVEGAS social game and app. These extend spend recognition and exposure to our M life loyalty program to members between visits to our resorts.”

The possibilities of tracking and rewarding non-gaming spend are limitless because the revenue is not limited to a fixed location like a slot machine, roulette wheel or blackjack table. As more national retail chains begin to participate and are implemented in the programs, retailers may take to casinos in the early 21st century like they took to shopping malls in the late 20th century.

“Once guests at casino resorts realize that the loyalty program is not exclusive to the casino and begin to use their loyalty cards for non-gaming activities such as dining, entertainment and retail, they are able to earn the same type of rewards and incentives traditionally offered only to casino players,” says Soukup. “Tracking of non-gaming spend will become increasingly precise and comprehensive, so industry operators need the proper systems technology in place that will adapt and evolve to meet their unique needs in whatever situation.”