Communication drives a culture change in casinos

You can’t help but wonder how much better casinos could be doing if each department understood the true value of the property’s guests and aligned their strategies around maximizing that value.

It’s not for lack of innovation in the gaming industry. There are more slick back-office systems and new revenue centers on properties than ever. Technology is not the primary obstacle to running a more profitable casino. Culture is.

It seems like every day one department is making a decision that undercuts another team’s approach, whether it’s casino hosts over-comping on the gaming floor, the front desk providing upgrades to low-rated players or marketing teams getting overzealous with discounted promotions.

So much for “integrated resorts.” We’ve been talking for a decade now about the new-look casino that can take advantage of nightclubs and golf courses as much as the gaming floor. But we still struggle to actually coordinate operations among different departments that make up an integrated property. The lack of communication will only hurt casinos further.

Much of this is due to the fact that, at many casinos across the country, departments still work in silos without a proper operating structure that encourages collaboration and communication. This old-school culture still permeates the back-of-house at many casinos. The result is different groups operating independently, not on the same page with the resort’s overall strategy. Too often the value of the guest gets lost in translation.

Would the front-desk clerks give up that last remaining suite if they understood how valuable it could be to have it open when a whale walks in at the end of the night expecting to get that room? No. But it’s not their fault that they don’t know any better. It might not even be their manager’s fault, if she wasn’t invited to the weekly revenue meeting with the heads of the casino, marketing, sales and other departments.

Catering to your diverse group of guests cannot be done in isolation. Operating a casino today requires bringing in a variety of decision-makers to collaborate on a property-wide approach. Compensation and bonus structures must be aligned across the entire resort—and no longer tilted overwhelmingly in favor of the gaming floor. If revenue and profitability across all channels are important (and they are), that vision and strategy must be communicated from the CEO down to the front-desk clerk.

 

Stumbling Blocks

As an example, casino management and hotel management are often in contention over room blocks and discounting, and the struggle often leads to poor strategizing and missed opportunities to drive profit.

Some operators still use blocks, essentially allocating the casino manager one-third of the hotel rooms for upcoming weekends. An employee will physically block 300 rooms in the PMS for the casino, then a week before arrival the casino manager can release the rooms if they don’t sell. Each department promotes, markets, sells and comps their various targets, but rarely do they come together to discuss an overall revenue strategy.

Even if the casino floor is where you make the most money, the hotel and other departments are playing critical roles in getting those gamblers in the door in the first place. Different roles within your company—including marketing, distribution, operations, revenue management, F&B, hotel and gaming—each touches the guest at a

different point along their journey and therefore has the ability to personalize the experience and optimize revenue opportunities.

Particularly important is a synergy between revenue management and marketing. When the two are in sync, offers and comp decisions are made in a more strategic manner.

The reality is many casinos today are still operating integrated resorts with the same approach they had 20 years ago. To truly connect with the guest across multiple touch points, representatives from all departments need a seat at the table.

 

The Evolving Casino Landscape

Casinos that don’t bring their various departments together to collaborate on marketing and revenue strategies could be in for a rude awakening. Gaming revenues are slipping at casinos across the country, and more operators are looking for ways to monetize other parts of the business: food and beverage, meeting space, spa and other amenities.

At the same time, younger casino-goers are looking for different experiences and may not even be gambling at all. Instead, they’re coming to resorts for the food, the pool experience, nightlife, the spa, etc.

With so much attention still focused on the gaming floor, other guest touch points—including the hotel rooms—can be treated as an afterthought. This often leads to different departments developing and embarking on their own strategies. Even departments that touch guest revenue are left in the dark on how the operation is doing, and very rarely does management share insight on upcoming demand and its impact on operations.

Most detrimental is the divide between hotel and casino operations. Because hotels want to drive revenue and casino hosts have the ability to discount or comp players, it often leads to a struggle between the two. Unfortunately, casino and hotel managers do not often share goals and incentives.

When casino and hotel teams can work side by side and in conjunction with sales and marketing, strategies will be more effective and common goals will be shared. There’s no silver bullet out there that creates this kind of teamwork immediately. Everybody has to be committed to that one common vision over the long haul, and casino leaders need to establish a new culture to get that buy-in.

Author: Marco Benvenuti

Marco Benvenuti, a principal with Duetto Consulting, has extensive experience in revenue management, business analytics and IT. In June 2008, Benvenuti founded and managed the Enterprise Strategy department at Wynn and Encore in Las Vegas. He oversaw revenue management, data analytics, direct marketing and the online channels. Prior to his tenure at Wynn Las Vegas, Benvenuti was part of the Business Strategy department at Caesars Entertainment (formerly Harrah’s Entertainment), where he built the business intelligence platform for revenue management decisions that is still in use today. Benvenuti has patented two unique inventions: the pricing engine for one-to-one dynamic pricing (sole inventor) and the enterprise value algorithm for calculating the value of every customer (co-inventor).