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Measuring Stick

How do we evaluate performance in this year, and probably next year, of our casino, our employees and our customers?

Measuring Stick

As everyone knows, this year has been unlike any other. When casinos close for at least three months, that’s bad enough. But when they reopen with reduced capacity, social distancing, dining restrictions and a gaming experience unlike any other—not in a good way—the year just continues to get more weird. Is that revenue lost forever? Will those customers ever return if it takes years for life to go back to “normal?”

Just to add insult to injury, now we have to wonder how to evaluate the performances of not only our properties, but also our employees and customers. What is a reasonable expectation and how will those expectations be interpreted?

I’m a big baseball fan. One of the biggest regrets when this thing hit in late March was the start of the baseball season was suspended indefinitely. And when they could have returned earlier than other sports, Major League Baseball dithered, argued and prevaricated about how to do it. When they finally got started in late July, it meant an abbreviated season of just 60 games (a normal season is 162 games), with expanded playoffs (meaning some teams with less than winning records could get in), and strange rules (too complicated to mention here, but things that would never have happened in any other year).

So my opinion throughout the process was that it was going to be a bogus season. Some mediocre teams would get hot and make the playoffs while other better teams would get off to slow starts and never catch up. Winning a championship in such a convoluted season wouldn’t be as compelling as any of those full-season crowns.

But then I heard an opinion that maybe it was the complete opposite. Every team had the same unbelievable challenges when it came to staying healthy, working through multiple postponements because someone on the team or the staff tested positive, making up those games as parts of doubleheaders of seven innings each game (in every other season, nine-inning games were always played). These things have never been factors in any other season. So teams had to overcome incredible obstacles to work toward the championship.

While I could see that side of the argument, I’m sticking to my original impression. A championship this year is the ultimate asterisk and the team that wins will be forever tainted by it. This year in baseball will never be repeated—we can only hope.

But this gets back to, how do we evaluate performance in this year, and probably next year, of our casino, our employees, our customers?

Casinos are usually big companies or owned by tribes. Most commercial casinos belong to corporations that own multiple properties. Lots of casinos these days are owned by real estate investment trusts (REITs) and operated by pure gaming companies. When the REITs bought the properties, they worked out a deal for rent that forecast a reasonable amount of revenue. But with casinos closed for months and no revenue coming in, how will the REITs adjust?

Tribes count on casinos to fund their social services to tribal members. What happens when that revenue falls short?

Early on in the pandemic, there were lots of prognostications about how long certain corporations could last without any revenue coming in. Some of them were surprisingly long, as much as two years in some cases. But then again, the REITs rent due was pretty substantial. I’ve been told by several experts that deals are being worked out between the REITs and the operating companies that will lessen the burden and spread out the payments. But what if unforeseen circumstances arise like another closure (God forbid) or simply a lack of response from loyal customers?

When it comes to executives who had proposed budgets last year that are now blown to pieces, how does a company evaluate whether the executive team is doing a good job when it fails to meet that budget? Of course it’s a hopeless exercise, but where do you draw the line in how much revenue is not enough? And how do you meet those expectations? Do you count on increased revenue or do you cut costs by not bringing back employees that might be needed?

And speaking of employees, how do you judge their performance when they do come back? Are they going to be rated on their customer service skills or how efficiently they do their job, thereby bringing in more revenue? Are they going to be stressed out by wearing masks all day? Are employee unions cooperating or obstructing your operations?

And finally, are your loyal customers comfortable returning to your property, or are you going to have to bottom-feed for people you would not normally pursue? This, of course, is the question that will eventually determine how well the industry recovers and how we will look back to determine what should have been the ultimate expectation.

Roger Gros
Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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