Unless you work at an integrated resort on the Las Vegas Strip, where more than 65 percent of revenue is generated by non-gaming amenities, you’re devoted to the casino floor. In most other jurisdictions, including the “locals” casinos of Vegas, gaming revenue accounts for at least 70 percent of total revenue, up to as much as 95 percent.
It’s no surprise that many casinos are slow to grasp the importance of non-gaming revenue and the capital reinvestment it requires. When most of your revenue is a result of gaming activity, why upset the apple cart? And how much “incremental” revenue will these costly non-gaming attractions bring in anyway? Your current customers provide great action, and you take good care of them. Why try to draw people who may not gamble—or not as much—and may get in the way of your best players?
Good questions. And the answers can sometimes be down in the weeds.
The definition of incremental revenue is a slippery thing. It can mean a very small portion that will add pennies on the dollar. It can also mean revenue you don’t now have, that you can build on and increase over time with a sincere commitment to the concept.
Non-gaming attractions are already part of all casino operations, no matter how gaming-centric. All casinos need restaurants. If a hotel is involved, you’ve got a pool, sometimes a spa, a gym and maybe a small number of meeting rooms. You’ll need a gift shop to sell your logo merchandise and other high-margin items. And in most cases, you need entertainment, whether it’s a lounge with a torch singer or a showroom with star attractions.
In fact, a casino is often a collection of different businesses under one roof. So if you’re in the hotel business, why not make the best you can? And we all know repeat customers are the rule at great restaurants. How about more than a gift shop? Quirky and unusual stores are sometimes big hits in a casino. And of course meeting and conventions can be a very lucrative business if you get the right mix of groups and excellent execution.
I know players are our lifeblood, and if they want a comped room or meal, that will eat into profitability. But that’s where revenue management comes in. If you’re getting your profit on the casino floor, you can afford to give up something in hotel or food and beverage.
But there’s another element to this equation as well—increased competition. You’ve got to protect your territory, and what happens if existing or new competition adds the elements you’re missing? Full suites instead of just rooms? A noodle house for your Asian customers? Or an outlet mall connected to the property? You could lose loyal customers, no matter how well they’re treated, if there are more reasons to visit your competition. So be proactive. Don’t let your competition get the jump on you. Your property needs to be the leader in the market, not the follower.
You stand to lose your loyal customers no matter how well they are treated because there are more reasons to visit your competition. The only answer is to be proactive. Don’t let your competition get the jump on you. Your property needs to be the leader in the market, not the follower.
The biggest argument for non-gaming amenities is to protect your market. If you’re truly treating your players right, they’ll sample the competition and then return to the place that makes them feel special.
Don’t let complacency rule. Take the lead and control the market.