As non-gaming revenue continues to drive Las Vegas tourism, casino operators are generating more revenues from dayclubs, nightclubs and pool parties.
The season has changed, too, from a three-month summer campaign to a year-round battle for the dollar.
“Return on investment is measured completely differently now than 10 years ago,” says Evan Hunt, director of VIP services for the Foundation Room Las Vegas. “Back then, there were only a handful of non-gaming venues, primarily focused on the summer season. Now, there are so many new venues, you have to draw guests year-round if you want to hit your desired return on investment.”
Since 2011, more than 20 new, renovated or rebranded dayclubs, nightclubs and pools have been introduced in Las Vegas. The season has been extended from St. Patrick’s Day in March to Labor Day in September, and marketing to millennials and locals has skyrocketed. Successful dayclubs achieve ROI by charging top dollar for admission on holiday weekends, when popular DJs play or celebrities host the parties.
The price of admission during these events often increases throughout the day—entry fees of $75 for men and $50 for women at 11 a.m. can jump to $100 and $75 respectively by 2 p.m. At the height of the party at 4 p.m., admission can soar to $150 and $100. To maximize a dayclub’s profit, there are no comps for high-profile events, so everyone has to pay. With capacities that can exceed 500 and even 1,000 people, it’s clearly easier to clean up.
“Before, you could just throw a pool party during the day and expect a decent turnout because the competition was so limited,” says Jerome Davis, president of Urban Professionals, host of the longtime “Urban Hangover” summer party series in Las Vegas. “Now you have to review the programming at other dayclubs and pools before you schedule anything, just to make sure you can maximize your return on investment.
“However, the increased competition has given tourists a better entertainment experience, which is great for the Las Vegas brand.”
Pooling Resources
For pool venues that stay away from massive parties, maximizing ROI is not nearly as straightforward. It involves more marketing to hotel guests and other distinct demographics.
In Downtown Las Vegas, the pool at the Golden Nugget has done it several ways—first, by keeping the venue (and the bar) open as late as midnight during summer non-swimming hours. A “trickle-down” effect of the pool’s elaborate waterfall and aquarium is that they draw locals. With ongoing promotions for its food and beverage outlets, the Golden Nugget has created a blueprint for the successful pool venue.
“The Golden Nugget pool developed a buzz among us locals because it’s so accessible,” says longtime Las Vegas resident Karl Anderson. “Locals are always looking for a unique experience where we don’t feel like an outsider in our own city. The pool has great nighttime reverse-happy hours to complete the experience.”
In the middle of the Strip, two pools at neighboring properties use two different marketing and pricing techniques to maximize ROI. The Pool at the Linq, now in its second season, has already earned a reputation as a “come-as-you-are” party pad, often with minimal to no admission fee and a variety of DJs for all musical tastes, from EDM to hip-hop and even classic rock.
The Pool’s objective is to drive longer stays, attracting guests who arrive between 9 a.m. and noon and stay until 4 p.m. to 6 p.m. Many dayclub guests stay between two and four hours maximum; longer stays mean more food and beverage revenue to offset the low admission fees and lower prices on daybeds and cabanas.
A short walk from the Linq is the ever-popular Flamingo pool, one of the largest in Vegas. Because of its size, it’s maximized return on investment via unique programming, including an ongoing series of concerts by hip-hop and dance music artists of the 1990s, from Tone Loc to Rob Base to Freedom Williams of C&C Music Factory.
The concerts draw a lot of fans from the Southern California market as well as the 35-to-50 age demographic—often overlooked in Vegas advertising, even though these people have more disposable income than their younger, hipper millennial counterparts.
Another on-site marketing technique adopted by the Flamingo: ongoing interactive contests that are heavy on audience participation. These contests, revolving around F&B sponsors, a holiday or sporting event or other entertainment, encourage guests to stick around for another 30 minutes or an hour until the next contest, where they have a chance to be selected. That adds more revenue to the food-and-beverage bottom line, and a dynamic energy to the pool programming overall.
“The interactive part of my fashion show at the Flamingo pool really made it stand out and got the audience involved,” says Natalie Yaru, Beverly Hills-based designer of the Manam fashion line. “It’s rare to see that at a fashion show, but since you’re in the middle of Las Vegas and everybody wants to be involved, it’s a perfect fit.”
Programming Profit
In the nightlife industry, the buzzword du jour is “programming,” drawing talent that ensures high turnout and solid food and beverage revenue results.
“We measure return on investment very analytically,” says Anthony Olheiser, executive director of brand activation at Luxor, which operates the LAX nightclub. “Our booking decisions are largely driven by pro forma scenarios to determine the financial viability of the evening. This allows us to keep our prices lower than most of the competition, which positions LAX to a broader consumer base.”
One of the most enduring nightlife venues in Las Vegas, LAX also made the decision to operate one day less each week in 2016 compared to 2015, a decision that has “paid large dividends to date this year,” says Olheiser. “We’re experiencing record revenue and profit months this year, and the momentum continues to climb.”
On the opposite end of the spectrum, many industry insiders believe the premium nightclub trend may have reached its apex, and the days of high-priced DJs, quarter-mile-long admission lines and expensive bottle service are limited.
Omnia, Hakkasan and XS are the only nightclubs left on the Strip that routinely pay large amounts ($25,000 and above per night) for DJs and celebrity guest hosts. While they have cornered the market among the millennial and 35-to-45 age demographics, maximizing return on investment for these pricy nightclubs is truly a 24-hour-a-day, all-season job.
So, those nightclubs proactively market to corporations. They typically see a spike in venue buyouts during the busy convention and trade show season, from October 1 to April 30. Because many corporate nightclub events end between 10 p.m. and midnight instead of 4 a.m., the shortened staff schedule means less overhead for the nightclub. Meanwhile, the older crowds generate substantial amounts of revenue.
“Before, the nightlife industry was scared of the winter time, especially after Halloween. It was like being in hibernation for four months a year,” says Jamel Mitchell, o
wner and operator of In Ya Entertainment, which hosts large corporate and social groups at all the major nightclubs on the Strip. “Now, both the nightclubs and promoters are embracing it, because the convention season gives everyone a new opportunity to drive revenue and brand the venue to an entirely different demographic.”
Making it Work
For Evan Hunt, the Foundation Room’s location at Mandalay Bay has made him an expert on convention-goer outreach, strategy and tactics. A prime example of the Foundation Room’s innovative programming approach occurred on a Saturday night in July, when the popular CosmoProf cosmetology trade show was at the Mandalay Bay Convention Center the same night superstar comedian Steve Harvey hosted his annual Neighbor-hood Awards at the property.
To maximize his return on investment, Hunt had to identify a celebrity guest host for the Foundation Room who would be marketable to both the cosmetology convention attendees and the predominantly African-American guests at the award show.
His answer? Legendary model and celebrity Tyson Beckford, who was a smash hit.
Beckford “tweeted about it weeks in advance, and we were able to use that as the basis of our promotions,” says Hunt. “We did our job, got a lot of press out of it and felt the residual income and buzz until a week after the event.
“That’s how you use targeted nightclub programming to maximize return on investment and publicity at the same time.”
