Redesigning casinos is a tricky business. It’s never “out with the old and in with the new” unless you’re talking about redefining a niche property, and that wasn’t the case at Grand Biloxi, which is now known as Harrah’s Gulf Coast.
The trick at Harrah’s Gulf Coast was to give existing customers an improved product that would promote loyalty, keep a loyal and skilled workforce enthusiastic about the place they work and add new features to the property that would help expand its overall business opportunity.
It looks like Harrah’s Gulf Coast has succeeded on all fronts. Completed last June, the rebranded and redesigned property has increased admissions by double digits, introduced younger people to the property, grown table games revenue and extended its marketing reach.
Those are the early returns, per Jonathan Jones, senior vice president and general manager, Harrah’s Gulf Coast. Jones, who has been at the property for three years, recently gave Casino Journala personal tour of the redesigned facility and talked about the underlying thinking behind it. A summary of our conversation follows.
GETTING THE GREEN LIGHT
Harrah’s Gulf Coast is one of over 50 casinos owned and operated by Caesars Entertainment, each competing for resources and attention, so getting the go-ahead for corporate investment took good talking points. While the Biloxi, Miss., gaming market has followed the national trend of flat-to-down revenues and increased marketing expenses, casinos on the Gulf have steadily reinvested in their product, with the most noteworthy investment happening right next door at the Golden Nugget, pouring $100 million into its purchased Isle of Capri property on Pointe Cadet.
“That helped our case,” said Jones. “But it wasn’t just them. Hard Rock finished their hotel off in early 2014. Golden Nugget finished up in May. Island View is putting some money into their place. The IP and Palace have also reinvested. There was money being spent in this market, and it also raised the question of what trends they were seeing to be so optimistic. We’re going to see in 2014 single-digit growth, if there is growth at all, with the introduction of about $200 million of new capital into the market. So you could say we’ve bought ourselves to flat. But I wouldn’t say any of these were bad investments. Hard Rock was undersupplied from a room standpoint. The new Nugget is a nice place and it has been good for the market.”
The relaunch of Golden Nugget also served as a reminder of the need to clean up the foundation; pilings and ironwork from the abandoned Margaritaville project have lingered across the street from Grand Biloxi since 2008. The project relaunch was greenlighted and announced in December 2013. The investment amount has not been disclosed but Jones termed it, “modest.”
Once the decision was made to reinvest and rebrand, a name had to be chosen.
“Going with the Harrah’s brand was kind of an easy decision if you look at the portfolio for Caesars,” said Jones. “We have three major brands; Caesars, Horseshoe and Harrah’s. The Horseshoe brand is great, but it’s very specific if you look at the pillars. The basis of the Harrah’s brand is service, relationships and fun, areas where we already had some momentum. We did research in feeder markets like Atlanta and it’s a popular brand. In terms of recognition and awareness, it is a huge step up for us. This is a mature, regional market that is not going to grow by itself. For us to grow we have to import business, so from that standpoint the Harrah’s name made a lot of sense.”
Adding “Gulf Coast” was a less of a certainty and, given the look and feel of the redesigned property, looks especially smart in hindsight. “Everyone assumed that we would be Harrah’s Biloxi, but we got together as a leadership team and challenged that notion,” said Jones. “We wanted to differentiate ourselves from other parts of the state by letting folks know that we’re close to the water. Besides that, there’s a big push to market this whole area with our Regional Convention & Visitors Bureau as the Mississippi Gulf Coast, so it made sense to go with Harrah’s Gulf Coast instead of Harrah’s Biloxi.”
BUILDING ON EXISTING STRENGTHS
Jones pointed to two competitive strengths that Harrah’s wanted to leverage with its reinvestment. In descending order, the second one was its database; the property’s membership in Total Rewards and being part of the Caesars Entertainment Network. The first was its employees.
“We have about 800 folks who work here and they have close to 10,000 years of combined experience,” said Jones. “It’s a very close-knit group, and with tenure, comes the ability to perform one’s job quickly and flawlessly and spend time with customers building relationships. There’s a lot of history here, so we had to be sure that we didn’t just cast that away, and you see that with a lot of our creative: ‘It’s the same smiling faces and a new name.’ To put a bow on it, our folks have been here so long and have been working so hard that we owe them this investment; a brand new casino, some new restaurants, things that they can go out and tell their friends about.”
With that in mind, the approach to redesigning the casino floor was more evolutionary than revolutionary, but the makeover was more transformative than originally envisioned. The redesign was conceived and executed by Cuningham Group, which won a competitive bidding process. “We involved our brand team quite a bit,” said Jones. “We wanted to make sure we were within the Harrah’s brand standards but where we had opportunities to be kind of unique and compatible with this region and its coastal environment we took them.”
Examples are the carpeting and light fixtures which are in light, coastal colors, along with a lot of “Harrah’s purple” throughout the property. Some things that weren’t in the initial design were added such as additional light fixtures. Ideas from other Caesars properties were also borrowed, such as letting in more natural light, which has been a hit with the company’s new downtown properties in Cleveland, Cincinnati and Baltimore.
“We were just going to go with new carpet, and then we started talking about columns,” said Jones. “Then we moved onto light fixtures and to some of the branding elements like wall wraps, which really bring the brand to life. Similarly, we capitalized on our region and the improved view across the street. We focused on the windows that we have in the casino, opening them up, adding a lot of natural light and a brighter, more airy, comfortable feel. This used to be a traditional casino design; deep, dark columns and lots of gold and red. We’re really happy the way it turned out.”
The floor layout was tweaked as well. Having noticed over the years that most of the casino’s foot traffic comes from the hotel, the aisle entry was changed. “It previously sent you up a ramp and you didn’t realize you were in a casino until you were well into it,” said Jones. “We changed the main aisleway which now takes you to a stairwell and we moved some table games forward so you see them when you are at the top of the stairs. That’s where our craps pit is, which is really kind of the center of the action. So you get some action and atmosphere as soon as you walk in. You gravitate toward it; it’s a good spot.”
YOUNGER, BUT NOT TOO YOUNG
The gaming product was also revamped. Harrah’s Gulf Coast bought all new video poker machines as part of the major Caesars/IGT video poker deal last year. The property has seen strong video poker results since the re-brand. It also got some new games out of the now-closed Harrah’s Tunica property. Some minor adjustments were made to the slot floor to add more end game premiums. The total number of slot games has risen slightly from 750 to around 775. “For the size of the business that we have, the size of the floor is perfect,” Jones said. “A lot of people chose us because it’s a smaller floor. They feel comfortable and safe and have easy access to our staff.”
The staff has proven a reliable sounding board for the overall impact of the redesign on the gaming business. “They know more about this business sometimes than I do,” Jones said. “You walk around the floor and ask how business was the night before and before I get the numbers I can just ask the employees and they’ll tell me. They notice that we’re getting younger. We’re attracting a little bit different demographic and that’s good. It’s a later crowd. Table drop is up and so are casino admissions. They just like being in a place that’s busy.”
That said, Jones stressed that Harrah’s Gulf Coast didn’t want to skew too young. “We’ve had some missteps as a company,” he said. “For instance, we can talk about Showboat now because it’s closed. We had the Foundation Room and the House of Blues there and that was a bus business property with older slot playing customers. We tried to do DJs and nightlife and those two things were just hard to resolve. We didn’t want to come out here and be a hip, party place. That’s not our brand. Golden Nugget has done a great job with their pool and the daylife they’ve created and Hard Rock has their music brand. We still want to be a comfortable resort at the end of the day. We’ve got a great spa, a golf course; now we’ve got great restaurants and a nice pool and a fantastic staff. That’s who we want to be and it just happens to resonate with younger folks and not alienate our core customers. That’s a good mix for us.”
AMENITIES AND FOOD
The updated property really comes into focus on the non-gaming side, where there are a number of new offerings, particularly in food and beverage.
Limited funds were allocated for the hotel, which ended up taking a back seat to the gaming floor in terms of reinvestment. The focus was on suites and the high-floor, south-facing, Gulf-view rooms. The biggest, nicest, suites got the most work. That included all new furniture, wall coverings, linens and window treatments. Mid-level suites got a little less, while the high-floor rooms were upgraded to warrant premium pricing.
“On the high floors, we focus on gearing those to our Diamond and Seven-Stars guests and making sure they get the better view, but now we’re making them available for sale as well, doing the balancing act between cash and comp business which is a nice problem to have,” Jones said.
The pool has a brand new bar, a new deck, and new seating. The hotel lobby bar was redone and connected to the pool bar, Mix & Mingle, which looks out over the Gulf. “Pools are something our company is paying a lot of attention to,” Jones said. “We’ve had a lot of success with pools in Las Vegas and we’re starting to see it regionally as well. We really wanted to make sure our pool here was a compelling product.”
On the F&B side, the big changes were two new restaurants; Steak and Shake and Magnolia House by Kelly English.
Steak and Shake replaced what was an underperforming Asian noodle bar that was open three nights a week and was doing about 80 percent takeout business. “We wanted to move our fast casual dining which was taking place in the hotel lobby and move that closer to the casino,” Jones explained. “We also wanted a brand that has a national presence and we settled on Steak ‘n Shake. It’s a contemporary, modern design; a great looking space that comes out onto the casino floor a little bit so it really sticks out and brightens up that corner of the property. The guests love it; it’s open 24 hours which we really needed and it has been a home run.”
A BOLD CHOICE THAT’S WORKING
On the fine dining side, Jones looked at a market that is very competitive in the steakhouse segment. There is 32 at the IP, BR Prime at the Beau and even branded product like Ruth’s Chris (Hard Rock) and now Morton’s at the Golden Nugget.
“The average customers stays two and a half nights in this market so we thought, let’s do something a little different,” Jones said. “Customers want to be able to have a good steak when they come to a casino and we’ll offer that, with a little bit of a southern flair and a focus on the region that we’re in with seafood from the Gulf of Mexico. Add an up-and-coming celebrity chef in Kelly English, who has roots in New Orleans, Memphis and Mississippi. It has been a huge success; our customers have loved it. “
The layout of the Magnolia House space is non-traditional, which is one of the reasons why Jones and his team chose it. “Kelly’s first restaurant is Restaurant Iris in Memphis and it’s in an old home with multiple rooms,” Jones said. “We felt that fit with our culture here of Southern hospitality and personal relationships with our guests. It’s a little bit more intimate, but it’s also kind of casual; it’s not meant to be stuffy. We play good music in the restaurant, our servers have a good time with the guests and we have a great management team. There’s a den, a living room, a sun porch and a dining room. We also have a bar in there now. We’ve seen across the company that the bar in the fine dining restaurant is something guests like, especially individuals who are dining by themselves.
“We’re still dealing with customers who want a steak and a baked potato. If they ask for it, we’ll give it to them. These are plated items; it’s a creative menu. Heart and soul are put into it. It resonates very well with the customer who knows what they could get at a steak house. The number of text messages that I get from friends that are in there is huge compared to what it was with [its predecessor] LB’s Steak House.”
By a number of different measurements, the reinvestment in Harrah’s Gulf Coast has paid off nicely. Through September 2014, the property was averaging 16-plus percent growth in admissions year over year. Local business is up “pretty dramatically.”
“Un-incented business—folks that don’t necessarily have an offer—non-lodger trips, new business…these are all things that say there’s a message out there that’s resonating and at least we’re stimulating trial,” Jones said. “People are checking us out. Our managed transportation and air program business also continues to be strong.”
In terms of carded business, one thing Jones has noticed is a lot of reactivation. “We put offers out to people who hadn’t visited us in a year to try and reintroduce them to the property. We went pretty far back and had a strong response from them. We’ve had our host team re-engage with the higher end of that segment and we’ve seen some nice growth out of that group.”
The primary feeder markets remain Atlanta, the Florida panhandle and New Orleans. “We have a sister property in New Orleans which helps,” Jones said. “Charters have come from Cleveland, Chicago, two from Wisconsin. Memphis, and Nashville have grown a little bit with the new brand, but it’s still kind of early to tell if that’s going to hold.”
All told, it has been a nice ride since last June, when the reopening kicked off on the new Great Lawn with a Darius Rucker concert that drew almost 20,000 people.
“We didn’t know that we’d end up with the space across the street when we resolved the construction issue” said Jones. “It’s got light, lawn, walkways; it has really been an asset. There’s a lot of untapped potential there and we’re trying to figure out how to best use that space in 2015. For the concert, we had a VIP area with 1,000 people that obviously included customers, some local community leaders but we made sure that we gave our employees an opportunity to do that as well. We had over 100 of our employees in that VIP area, mixing it up with the Senators and the seven-star customers that were in town for the event. It was fantastic.”