The True Missing Piece

How to implement online reward redemption

With all the innovation casinos have made in valuing players, loyalty tracking and direct marketing, there’s one piece of the puzzle that’s still completely missing.

It’s the elephant in the room that few in the industry will talk about openly. It’s a simple fix that stays behind closed doors because, despite its ability to change the game for the casino industry, most casinos are unable to execute it.

To this day, decades after hotel room distribution moved online, many of your gaming guests cannot redeem their offers—room discounts and comps, free-play packages, amenity discounts, etc.—when they’re booking their overnight stay on your website.

Why? It boils down to the fact that there are many disparate systems required to run an integrated casino resort. Because the hotel doesn’t drive the revenue, connecting the hotel revenue management software is rarely a priority.

Rewarding your most loyal players with discounts and comps, and allowing them to redeem those offers on your website, works best when there’s communication between the casino management system (or patron management system), the hotel property management system, the revenue management system and the booking engine. Integrations between these different vendors are hard to come by, and slow and costly to build.

Most casino management systems operate with closed interfaces. Unlike public APIs (that are openly available to developers with few restrictions), this strategy allows vendors to charge large sums of money to build an integration and tap into communicating and sharing data with their system. For many of the large legacy systems, it’s tough to get them to even pick up the phone.

To their credit, a small amount of the mega-global casino companies have built their own proprietary systems to handle online redemption. Unfortunately, these systems are tough to integrate with. For the several hundred other casinos without the dedicated financial, labor and time resources, online redemption remains a pipe dream.

As it stands today, there are a handful of hotel industry booking engines that claim to offer online casino loyalty redemption, but buyer beware: They simply don’t have the integrations necessary to make it work. Several of the major casinos in Las Vegas and across the country have been trying to implement this feature for years with little to no success.

 

What Will Online Loyalty Redemption Change?

First and perhaps most importantly, the ability for casino guests to redeem offers online will allow for more dynamic player reward programs.

As it’s done today—deciding which players get free rooms, alerting them through a postal mailer and asking them to call your call center to redeem—loyalty redemption is a static strategy that doesn’t allow casinos to react to market conditions. For example, guests can ask to redeem their offer during your busiest week of the year, and your only options are to enforce blackout dates or give away revenue.

With a working online-redemption system, casinos are still valuing guests accurately based on total customer worth and average daily theoretical spend, but now they’ve got the ability to be a lot more dynamic with offers. Instead of offering comped rooms, you can use marketing terms such as “up to 50 percent off” or “potential for a comped room,” wait for the player to request their offer, and then quote a more dynamic rate based on true total customer value and the property’s supply-demand dynamics.

Next, more dynamic reward redemption would pave the way for the transition from casino postal mail marketing to more cost-effective electronic marketing. Currently, the response rate on email is low and casino marketers believe a bold laminated postcard is the best call to action for players. But interactive and dynamic rate redemption on the web would undoubtedly grow response rates.

As a side benefit, moving your player loyalty data and redemption online also allows for cross-property guest data storage, meaning each of your connected casinos will be sharing profile and customer worth data. Now, when a player visits one of your casinos and later visits another, you can use previous spend data to quote them the right offer.

Finally, don’t forget that more dynamic loyalty offers benefit your players as well. Instead of waiting for their mailer and then dodging blackout dates, players can now call anytime to get a personalized rate based on their true, real-time value to your property.

 

Casino Industry Innovation is a Win-Win

Valuing your players based on their true total worth—what they spend on the gaming floor, in the hotel room, at the restaurant and spa, etc.—and immediately offering them a personalized rate is the holy grail.

Major casino companies with multimillion-dollar budgets have patchworked their way to temporary solutions, but an industry sea change will require drastic improvement in tech vendor collaboration. Because of API hurdles, we’re still quite a ways away from industry-wide adoption.

Accelerating efforts toward online redemption has been a long time coming and could be a major industry innovation. Not only is it best for the profitability of your property, but it will also finally remove extra friction in the booking process and allow guests to redeem their offer on the same channel where they prefer to book their trip.

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).