Here's the worst (and best) possible things to do when marketing during a economic downturn

When a friend of mine suggested that I write a piece on casino marketing in tough times, I immediately phoned my spies in Las Vegas, Reno, Laughlin and Tunica “Just how tough,” I asked, “is tough?” Some of the answers might surprise you.

Early in the going, according to reliable sources, the idea of free gasoline to encourage casino visits simultaneously struck 719 casino marketers. The number coincides roughly with the number of casinos in the United States. And that happened when the price was $3 a gallon (oh, for those days again).

My operatives reported rejoicing in Las Vegas, and assorted dementia in the other gaming centers they dissected.

The Las Vegas Convention and Visitors Authority, for example, took a jubilant look at the visitor traffic. They found McCarran International Airport down 5 percent, visits by auto down 6 percent, and total visitation up 4 percent. Say what? The authority double-checked, according to my spy on the spot, and found that more people than ever are walking to Las Vegas.

Slot revenue, says my man, is dropping across the board -- except for pennies. In May, they were up 14 percent on the Strip and downtown.

Room rates in the city on the July 4th weekend were down 15 percent, year over year, and rates generally are at their lowest since 2003. Drops as much as 45 percent have been recorded in some of the off-Strip properties. Hey! Dropping the room rates is Reno’s proven strategy. I hope Las Vegas asked permission.

In Tunica, based on the first four months of the year, slots are forecast to slide 12 percent, compared to the same period in 2007. Table win is forecast for a drop of 18 percent. High gasoline prices, says my man onsite, have affected gaming revenues and casino head counts, resulting in room rate discounts and all sorts of gasoline promotions. 

Tough times, indeed, for this competitive market. But Tunica’s outdoor advertising was out there as early as March, screaming “Gas ‘n’ Cash.” The latest is a “Summer Gas Giveaway.” Score 1,250 points on the slots, and they give you an Exxon Mobil card worth $25 in gasoline.

There is genius here. Sounds like a lot, but at today’s prices, it’s only around six gallons. If you want to fill your tank it will take 3,750 points. Or more.

Think gasoline is high? Then check the price of milk, breakfast cereal, steak and arugula lettuce at your closest supermarket. Gasoline could come down, but not food. First thing you know the outdoor boards in Tunica will be pitching Cheerios.

In Reno, a general manager told my gorgeous agent, “We’re down a bit, but not as much as you might think--and we’re ahead of forecast for the year.”

What? When Reno occupancy averages 52 percent weekdays, how can one casino be ahead of forecast? Must have a supercharged slot director and a clever GM. Probably both.

One Reno casino dropped its buffet price from $18.99 to $7.77 per person for breakfast, lunch and dinner. Can you imagine the loss on food? The same casino unveiled a $7.77 room rate, Sunday-Thursday. Gotta give ’em credit for trying.

A second Reno GM put it this way. “My coin-in has hardly changed at all.”

Must be something in the water up there. There has to be some good reason why Reno-Sparks slot head counts, according to Wells Gaming Research, are down just 3.3 percent, July 1-15, and casino head counts are down only 2.5 percent in the same period.         

Laughlin, it seems, is in a bit of a funk. Compared to 2007, gross gaming revenue fell 34.6 percent in April, but recovered in May to -3.2 percent. Visitor volume was up 3.3 percent in May, but average daily room rates came in down 44.3 percent.        

Now what?

The worst possible things you can do:

  1.   Slash advertising and direct mail;
  2.   Believe the economy has gone to hell. It hasn’t;
  3.   Worry about gasoline prices, although all bets are off if Congress raises the gasoline tax as suggested;
  4.   Lower your food prices and try to get by with inferior quality.
The best moves:

  1.   Hand out all the free slot play your budget will stand;
  2.   I know everyone is doing it but offer free gasoline anyway;
  3.   Get your people on the floor to greet the customers and treat them like kings and queens;
  4.   Reward your frequent players;
  5.   Do a promotion, and then do another and another to keep your store top of mind.
As I write this (on July 18) oil has dropped to $129, the Dow is up 480 points in two days and the financial sector is positively giddy. Billionaire T. Boone Pickens, an oilman, is pushing hard in TV spots for wind power. Weird.

And there’s no war news from Iraq. Not a word. Maybe the newspapers and TV news shows have run out of bad news.