Editor’s Note: This article has been excerpted from Destination Marketing Insights, the new groundbreaking book by Marshall Murdaugh for producing higher volumes of business for tourism destinations and their partners—including casino gaming programs. It is now available at Amazon.com, BarnesandNoble.com and the author’s website, MMTourismMarketing.com.
With casinos coming soon to a neighborhood near you—or certainly within easy reach—many destination marketers are asking themselves: What’s the potential impact of gaming on our industry?
When Harrah’s Entertainment Inc. and the Narragansett Indians proposed a casino hotel facility in West Warwick, Rhode Island, major tourism leaders led by the governor balked.
The facility’s 115,000 square feet of casino space, 500 hotel rooms, two full-service restaurants, and a 55,000-square-foot ballroom would do considerable damage to the state and local tourism industry, many said.
In response, Harrah’s asked me to present testimony to committees of the Rhode Island legislature to factually address a number of relevant issues. The information we produced at that time should also provide useful background for you regarding casino gaming and its positive impacts for destination marketing.
Introduction To A Region
Since the development of Foxwoods Casino in nearby Connecticut, a steady stream of Rhode Island residents had been motivated to visit there for leisure travel and meetings—taking millions of travel dollars outside Rhode Island that could have supported local jobs and added tax revenue. In fact, according to Foxwoods executives, many Rhode Island businesses had taken their meetings to Foxwoods.
This isn’t surprising. As tourism has become America’s No. 1 industry, the attraction of casino gaming and its additional amenities for meetings, restaurants, retail and entertainment have become major parts of the product marketing mix that influences millions of visitor travel decisions throughout the United States.
What is surprising, however, was the dialogue and concerns expressed by some local tourism interests who believed that this proposed new venue from Harrah’s and the Narragansett Indians would have limited or negated opportunities for tourism growth and resulting economic prosperity for Rhode Island and the Providence/Warwick area. Indeed, the opposite is true, and this has been consistently so in destination after tourism destination throughout the United States.
To address these negative concerns, we first listed each of them, and then responded with the opinions from many of America’s top tourism development experts.
Concern 1. The new casino will compete with the state’s hotels, convention centers, and other tourism attractions.
Actually, the opposite would occur. This new casino facility would provide a new, major motivational reason for travelers to visit Rhode Island and the Providence/Warwick area, and extend length of stay.
In fact, fully two out of three visits (69 percent) to the new casino were projected to be from out-of-state visitors, according to business analysis from Business Research and Economic Advisors (A. J. Moody, The Economic Impact of the Proposed Destination Casino in West Warwick, RI, March 2003). This creates a growing market for new travelers to Rhode Island that would use, over time, still more hotel rooms—not less.
Because the casino provides more consumer travel choices—and enhances the visitor product—it would also help the destination effectively compete with other out-of-state destinations, such as Foxwoods and the Mohegan Sun. It would also heighten the destination’s appeal and provide broader diversity of the visitor destination for such feeder markets as Boston.
We asked nationally recognized tourism expert John Boatright, chairman emeritus of the Association of Travel Marketing Executives, about this issue:
“Think of destination-selling as you would a major retail mall. Most visitors don’t just come for one store in a mall. They come for the whole experience, the variety of different stores, products, and appeals, and the more product diversification there is in a mall—as with a tourism community—the more potential visitors will be attracted. That’s the way it is with destination marketing. Diversity of tour product brings more visitors, and this new casino product will deliver an expanded visitor draw for Providence/Warwick and the entire state of Rhode Island.”
Throughout America’s tourism industry, experts conclude that the addition of casino gaming creates a positive visitor amenity that ultimately brings new visitor business—not diminishes or dilutes it.
A prime example is Memphis, Tennessee, where tourism is now a multibillion-dollar contributor to the healthy regional economy. As neighboring Tunica, Mississippi, has become one of America’s most successful gaming capitals, it has had positive impacts in producing incremental business for Memphis and its visitor industry, according to local experts.
“We’re a much better travel destination today because of Tunica’s nearby casino gaming market,” said Memphis Convention and Visitor Bureau President and CEO Kevin Kane. “It has added diversity to our product mix and ultimately brought more visitors and more visitor dollars here that have benefitted everyone—particularly the creation of much-needed jobs for the hotel and restaurant sectors.”
Casinos provide another visitor amenity that can both motivate visitors and fulfill their interests while visiting destinations because of the increased worldwide popularity of gaming entertainment. Thus, by providing new visitors to the state, more visitors would be on-site to see and do more. And Rhode Island and the Providence/Warwick area would, over time, significantly increase their relative market share of the New England visitor industry.
According to Bob Whitley, late president of the U.S. Tour Operators Association, whose members produce the majority of tourism programs sold internationally:
“Travelers just about everywhere have gotten used to the proposition that casino gaming is now just minutes away from most destinations. And many consider it another amenity, another thing to do that enhances the visitor experience.”
In addition, for those future repeat out-of-state visitors to Providence and Warwick who extend their stay by visiting the new casino facility, the beneficiaries would be other area restaurants, retail and attractions which also make a portion of their living serving travelers.
Concern 2. The new casino will draw customers away from the state-owned Rhode Island Convention Center and area hotels.
No. Actually more meeting and convention planners would begin to choose Rhode Island and the Providence/Warwick area. Throughout the meetings/convention industry, planners who choose various meeting venues for their individual conventions and meetings employ a great diversity of site selection criteria based on the individual needs of their associations and members.
According to Joel Dolci, president and CEO of the New York Society of Association Executives, whose 2,000-plus members conduct many meetings in the Northeast:
“Meeting planners aren’t all looking for the same thing. Some will choose a casino property, while others will prefer a public facility. You have to understand that there’s a lot of potential meetings business out there, so the more meeting venue choices a community has to offer, the greater the potential volume. This casino should bring more meetings business to Rhode Island—not take away business from other existing facilities.”
This thought is echoed by Jeff Vasser, president of the Atlantic City Convention and Visitors Authority, which operates Atlantic City’s convention center:
“There’s a good synergism here and in Las Vegas between the principal government-operated city convention center and the meeting and convention facilities of the casinos. The end result is more business for everybody—not less. That’s just the way the business works. What’s more, there are thousands of non-casino hotel rooms that are filled daily from the attraction of the casino industry. It’s truly a business partnership.”
That means additional meetings business for Rhode Island. And when the delegates and their spouses are finished with the work at hand, the casino will offer strong entertainment potential for many who may not have previously chosen Providence/Warwick as a meeting site.
Concern 3. The addition of 500 new hotel rooms associated with the casino would negatively impact occupancy rates of existing hotels.
In the short term, when any new hotel facility opens in a community, there is the potential for a corresponding modest, temporary reduction in the hotel occupancy of existing properties.
However, at the same time, the total number of occupied hotel rooms throughout the community generally increases, producing more visitors and visitor receipts for the destination. Then, as additional visitor amenities attract more travelers, the community’s hotel occupancy will continue to increase.
There is another positive factor, too. When the new casino begins to produce new business for its hotel property, it will also generate overflow that will be absorbed by many existing hotel properties. And other visitors motivated to come to Rhode Island to enjoy the casino will have a variety of hotel accommodations to choose from—thus supporting the entire hospitality community.
Concern 4. A large-scale casino like Harrah’s would drain the state’s established hospitality industry (quality service employees), giving Rhode Island a bad name.
Not according to the Hotel and Restaurant Workers International. There are about 61,000 hospitality employee positions employed throughout the state. Even if all new casino jobs were filled from the existing industry labor pool—certainly an unlikely event—it would amount to only about 10 percent of current positions.
Actually, the casino will produce another 6,700 important jobs both on-site and as a direct result of the project. And management will also put in place an extensive job-training program to provide enhanced skill sets for entry-level positions.
Concern 5. Casino development will have a negative effect on the vitality of the local restaurant industry.
This concern has proven to be unfounded in jurisdiction after jurisdiction where the issue has been examined based on empirical and unbiased research.
Drs. George Fenich and Kathryn Hashimoto of the University of New Orleans School of Hotel, Restaurant, and Tourism Administration have studied the impact of casinos on local restaurants in locations throughout the United States, from small rural towns to large urban arenas. They found that although some individual operators experience problems, the industry as a whole thrives and grows with increases in the number of establishments and employees, and higher rates of pay; a variation of the old saying: “A rising tide floats all seaworthy ships.”(Fenich & Hashimoto, Perceptions of Cannibalization: What is the Real Effect of Casinos on Restaurants? University of New Orleans, 2000.)
We also spoke with Steven Richer, then executive director of the Mississippi Gulf Coast Convention and Visitors Bureau, about the effect of casinos on non-casino businesses. Richer has witnessed the results firsthand in three major gaming jurisdictions as the former executive director of the Nevada Convention and Tourism Commission and the past president of the Atlantic City Convention and Visitors Bureau:
“Wherever there is an already-established tourism product, a casino facility creates an added amenity that enhances the attractiveness of the area and gives people another reason to visit. It invariably results in more business for everyone—restaurants, hotels, shops, you name it. It’s a catalyst for development, not a deterrent.”
According to Jim Funk, retired executive vice president and CEO of the Louisiana Restaurant Association, casino restaurants would not be a negative factor for the existing restaurant industry of Rhode Island. In Louisiana’s case, the state perceived the need for casinos to level the tourism playing field with neighboring Mississippi, which already had casinos. Referring to the experience in New Orleans, Funk remarked:
“At first our local restaurants were concerned about cheap food and competition from the casino. In fact, this association was instrumental in obtaining restrictions on their food and beverage operations. But, over time, we found the tight restrictions were just not necessary. You see, the casinos don’t just give away their food to everybody, and they really can’t compete with the great food and diverse menus of our local restaurants.”
From Shreveport/Bossier City to Lake Charles, the local restaurant industry in Louisiana has been expanding. In each case, Funk said:
“The casinos have brought more visitors and the local restaurant industry is booming. Unemployment is down and property values are up. The people are glad casinos are here.”
For all of these reasons, there should have been no cause to believe that the effect of a casino in the Providence/Warwick area would be any different than it has been in other parts of the country—producing more visitors, more jobs, better wages, and an expanding local restaurant industry.
Forging Effective Destination Marketing Organization/Gaming Partnerships
For those communities with gaming partners, or future plans to create them, we recommend development of a strong business relationship to maximize success.
Because the marketing model for casino gaming enterprises is to most likely concentrate on the local and regional market, a partnership with the destination marketing organization (DMO)— usually a convention and visitors bureau or tourism office—will expand the casino’s marketing reach and resulting opportunity for new patrons and revenue.
For the DMO, the casino will provide diversification of product and visitor interest. In fact, with exception of retail shopping, casino gaming has become the United States’ most popular visitor activity.
Potential joint initiatives may include:
• destination advertising initiatives, including co-op ad placement, special consumer sections in magazines and newspapers, direct mail, etc.;
• media publicity programs, including promotional assistance, the hosting of writer familiarizations and site inspections, on the road receptions showcasing the destination, along with sales blitzes in major feeder markets, etc.;
• sales bookings made by the casino;
• web marketing, including DMO website banner advertising, special mentions, web linkage, etc.;
• trade show participation and support for the meetings and travel trade sectors;
• DMO publications for distribution through the casino; and
• any other major promotions recommended.
The DMO would then provide the casino:
• editorial coverage in appropriate consumer and meeting/travel trade publications;
• appropriate listings in DMO-produced publications (official visitor guide, tour operator and meeting planner guides, convention services directory);
• sales leads for tour group and meetings business;
• other materials including upcoming convention/event lists, convention sales updates; and
• brochure distribution at the visitor center and other dissemination programs.
Creation of such a strong partnership alliance will provide additional manpower and financial contributions to the DMO, along with increased marketing support.
The results should also assure a new and productive travel industry relationship that leverages higher volumes of new visitor business for the community and its casino gaming partners—and strengthens their collective future marketing efforts and productive business results.