Have you noticed that ugly is the new hot? Take a look at some of the latest comedic hits-all the Judd Apatow movies that feature goofy, somewhat overweight, unshaven guys who somehow get the girl and save the day. Perhaps in this era of recession, we have shifted our interests from the skin-deep and vapid to the soul-searching and meaningful.
But what does this have to do with gaming? As I have written before, over the past decade, most major casino properties entered some kind of nuclear arms race over whose property could be bigger, nicer and fancier than the competition. Much as in the larger world—where the solution to everything was a nicer outfit, pair of shoes, or even luggage—in our world, we responded to everything by opening a new restaurant, remodeling hotel rooms or expanding an ultra-lounge. He with the best bricks and mortar won; it was simply taken for granted.
No market exemplifies this better than Atlantic City. Seven years ago, the first new property in more than a decade opened-the Borgata. And a spectacular property it is, living up to post-Mirage Las Vegas standards in every way-luxury rooms, name-brand restaurants, spectacular gaming spaces, and entertainment options galore. Virtually overnight, it took over the top market-share spot, leaving everyone else in its dust. Even today, in the midst of a recession and competitive pressures from every state surrounding it-and some two states away-it is shrinking the least of its competitive set.
In seven years, a lot has happened with its initial 11 competitors. One was imploded. Three are bankrupt. One had its license revoked, and two more have management seemingly determined to close. Why? Well, one can make up lots of excuses, but in my mind it comes down to one simple fact-they stopped playing on their own playing field and started playing on someone else’s.
Take the drive from Philadelphia to Atlantic City and you can summarize the billboards into two categories-Borgata’s and a bunch that say “We’re Nice Too!”
For the past seven years, each of these properties has been distracted by trying to glom something onto their old and fading properties. To use the phrase Sarah Palin made famous, they are putting “lipstick on a pig.” Whether it was adding the beautiful Quarter to the otherwise “carnival/bazaar” Tropicana or slapping a House of Blues alongside what otherwise is a House of Blue Hair, none of these projects made these facilities as nice as the Borgata, but what they did was distract management away from playing to their own strengths.
You see, you don’t have to have the nicest bricks and mortar in a market to win. Sure, there is some level of quality that is necessary to be open-but once you reach it, there are many, many ways to differentiate yourself.
Our firm faced this challenge in Detroit. That market, while only having four casinos, has its own Borgata, the MGM Grand Detroit. It is, in my view, one of the nicest casino properties in any market, anywhere. A billion-dollar, master-planned masterpiece. We, on the other hand, managed the Greektown Casino-Hotel, a casino housed within buildings serving (at least) their fourth purpose. Originally, the area was where fur trappers traded their wares-that tells you something about how old the buildings are. Ten years ago, the buildings were retrofitted to become the temporary Greektown Casino, and last year, after much renegotiation with the state, became the permanent facility.
But when you compare a brand-new, shiny MGM Grand to the former fur market Greektown, the comparison is tough. So when, on our first drive from the airport, we saw signs advertising restaurants and clubs at both properties we knew that, as is the case in Atlantic City, we were inheriting a property that was trying to compete on the “Hey, look at me! I’m nice too!” plan.
Not surprisingly, it didn’t work. Month after month, MGM had gained traction as Greektown slid further and further behind.
So what did we do? Did we rush out to build more rooms or fancier restaurants, or add more slot machines? No, no, and no. We stated the obvious-“If you want to go to the nicest casino in Detroit, it is a couple miles to the east”-and figured out the playing field we should get on. In effect, we embraced our ugliness. We decided to target the middle-American, blue-collar Midwesterner, something those of us from Kentucky (me) and Missouri (my partner) could get our arms around. We decided to poke fun at the $15 hamburger model that our Vegas-style competitor had used, and instead sold our entire buffet for $9.99. We brought a chicken into the property to play tic-tac-toe. We sold every hotel room-and the rooms are nice-for $99 per night.
In effect, rather than going for a glamorous position-a.k.a. Borgata or the MGM Grand-we went for the “we are one of you” approach, and it worked. MGM stopped doubling our business, and in 2009, we set all-time revenue and profitability records.
We embraced our ugliness. We stopped worrying about what we didn’t have and how nice our competitor was, and focused on what we did have and where we could compete.
I just wish this was an idea that someone could run with in Atlantic City. Perhaps the time has passed, perhaps Pennsylvania and New York have come too far already, but who knows? Perhaps with a little luck, one of those resorts will get a new lease on life by embracing its inner ugliness too.