Although my education was in hotel operations and revenue management, it just so happened that after grad school I landed in casinos on the Las Vegas Strip. After a stint at Expedia, I worked my way into Harrah’s and then Wynn before launching Duetto.
Back then, it seemed like the casino and hotel teams spoke two different languages, marketing was a different department altogether, and none of us shared any data or analytics. Online travel agencies were eating us for lunch, driving both rates and profitability in a downward spiral.
For too many gaming properties, this is still the case. If casino operators are looking for the model to turn the situation around, they can find it in their counterparts at hotels.
Eventually at Wynn, I was fortunate enough to be given the freedom to construct a more cohesive revenue team. We were able to think outside the box, and our first priority was aligning several departments along the same strategies, data, goals and KPIs.
It was around this time I met Patrick Bosworth, a recent Harvard Business School graduate, and together Patrick and I identified opportunities for Wynn to drive room revenue by pricing our inventory more dynamically. We built complex formulas in Excel to price each of our room types and distribution channels independently of each other.
As Wynn went through some changes, Patrick and I found our way out, but our newly formed “Open Pricing” models continued to grow. The more hoteliers we met, the more we learned we weren’t the only ones handcuffed by rigid pricing capabilities.
A decade later, while our Excel spreadsheets have evolved into cloud software that ingests and analyzes data to make accurate pricing recommendations, hotels have made significant strides on the strategy front as well.
In the hotel space, the revenue team has moved out of the basement and brings analysis to the table that ultimately shapes sales and marketing strategies. The majority of hotels have embraced some type of automation, where instead of keystroking rate changes on a daily basis across all channels, they’ve invested in some type of technology to assist. And finally, new data sources have become abundant in the hotel industry, allowing revenue managers to make much more educated and segmented rate decisions.
More Opportunities in the Casino Revenue Strategy Space
To put it bluntly: Casinos have been less receptive to change.
Some casinos do not have hotels, but those that do can replicate the lodging industry’s success, and it’s not as heavy a lift as they might think.
The idea of dynamically pricing your dates, room types and channels independently of each other is a no-brainer. This will help you segment your guests further and price each segment appropriately based on their value to your property.
On top of this, though, casinos have even more tools and resources at their disposable to make significant impacts to the bottom line. With access to a guest’s theoretical win or even gaming spend, casinos can combine that data with Open Pricing and begin dynamically customizing offers and rates based on the total value of each customer.
It’s not just for gamers, though. More intelligent pricing and reinvestment starts with better segmentation to value your casino guests more holistically. Customers who play high-stakes games and drink top-shelf beverages should be treated differently than guests who play penny slots and drink water. Patrons who don’t gamble at all should be treated differently as well—but they still should be recognized as a valued guest if they’re spending a lot of money in your hotel suites, nightclub and spa.
Reinvestment strategies can be more flexible to meet changing demand. Most casinos have three tiers of pricing: a comp for their highest-rated players, the transient rate for cash-paying customers, and a “casino rate” in between for players or spenders who have value to the casino, just not enough for a full comp.
Analyze as much data as possible from across the entire property to identify your highest-value guests who generate the most profit for your casino. Using only your casino database to fill hotel rooms is not the optimal strategy. If you’re basing your reinvestment solely on theoretical win, you’re missing the bigger picture.
What’s Holding Casinos Back?
Hotels didn’t jump all the way on the revenue strategy train right from the get-go, either. It took developing and adopting strategy best practices, as well as developing or purchasing tools to ingest the demand data, build a forecast, analyze it and send myriad rate recommendations to the right systems. All of those pieces and parts have been evolving over the past decade and will continue to do so.
The cultural shifts—trusting revenue teams to drive decisions, aligning departments around revenue goals, adopting more dynamic pricing strategies—took more time to adapt, and some hotels are still recognizing the value.
This is where casinos seem to hit a roadblock.
A small number are grasping it, and the results show. When you’re using the right data and making calculated decisions across departments based on this data, revenues will improve immediately. Cash revenue is the first to jump, but as you start getting the right players in the doors, total player value will follow, and soon your higher-rated guests are driving month-over-month profit increases.
Evolving revenue management practices to include new demand signals, automation and predictive analytics was obvious for hotels. Because the casino industry is changing fast, from less gaming to more entertainment, and from Las Vegas and Atlantic City to destinations across the country, adopting a more holistic strategy will be vital to sustaining your business for the long term.