Free play and visitation trends among topics broached by a panel of gaming operators that may help casino marketers formulate future plans
It was the philosopher Francis Bacon who famously equated knowledge to power. At the time he said it he was most likely referring to the scientific method, but this observation can also be applied to any form of business endeavor, including casino marketing.
Indeed, for a marketing executive to guide a gaming property to the next level and make informed marketing decisions, it often helps to have a macro-economic view of the legalized gaming industry as a whole—where the market currently stands, the forces impacting it both short- and medium-term and how it all may shake out five or 10 years down the road. Fortunately, a roundtable of casino operators at the recently held Southern Gaming Summit in Biloxi, Miss., touched on a number of macro-level issues with potential casino marketing import. The speakers at this session included R. Scott Barber, regional president mid-south, Caesars Entertainment; Jim Hoskins, COO, Golden Nugget Casinos; Jon Lucas, executive vice president hotel and casino operations, Hard Rock International; Austin Miller, senior vice president gaming operations, Churchill Downs Incorporated; and Susan Varnes, president and COO, Treasure Bay Casino Resort in Biloxi.
Below you will find excerpts from the roundtable, organized by topic.
CURRENT GUEST/VISITATION TRENDS:
Miller: The biggest thing that we are starting to see impact our visitation business is social gaming, particularly on the lower end. If you listen to a lot of the earnings calls, most people say the middle- and higher-end business is pretty healthy, but they are seeing some erosion in the lower-tier of the database. I suspect some of that has to do with social gaming and its growth across the entire world. The last I read, social gaming was about a $50 billion industry, accounting for about 18 percent of global gaming revenues.
It is here to stay and it is only going to get bigger. If you haven’t tried some of the product that is out there such as Candy Crush… they are pretty innovative. The social gaming companies can generate new content literally overnight, so they are ever changing and always offering new opportunities to entertain people.
Lucas: I think a hot topic in our industry is how do you appeal to the Millennials. Internally, we are discussing how we can appeal to them… how do we potentially reconfigure the floor in certain areas? What is a good game for them? This ties into the whole social gaming impact questions, since they are one in the same for Millennials.
Hoskins: Demographics are changing. I think a lot of the ways we approach our facilities and our amenities are changing; like trying to have things that attract people from a non-gaming standpoint. There is a lot of talk in the industry about that right now. Our database is absolutely getting older and I agree that our lower-tiers are eroding. We need ways to bring people in, whether it is through better pools or entertainment or whatever it may be. I know we have seen this before, at least I have in my 23 years in the business, but it is becoming more exacerbated now because there are so many more entertainment options.
THE FUTURE OF FREE PLAY:
Barber: From a Millennial customer standpoint, the amenities are very important. What is interesting from our perspective… is that the younger customer is willing to pay for this experience. They are not necessarily being investment driven toward this spending; this is not the generation that expects to get a coupon in the mail. You can have some pricing premiums on products and services if they are meaningful and attractive to this demographic.
Hoskins: I haven’t found a guest yet that doesn’t want to use a coupon. But I agree that we are learning how to monetize some amenities. In the past, when I started, everything was built around slots and tables, and everything else was just a big buffet. So in established markets, it is a little slower to come, but I think it is coming… we are going to see a switch from gaming to non-gaming. When we opened up in Lake Charles, La., there was a lot of non-gaming spend. There still is…that Houston crowd comes over every week and they spend money and are not scared to spend more; at our Blue Martini high-end nightclub they often buy a bottle for $2,500, sit down and party.
In our meetings, instead of just thinking about free play and coupons and how we are going to drive the younger generation in, we instead talk about how we are going to transition them to the table games and slots part of the business.
Lucas: As you see gaming proliferate throughout the country in these regional markets, what happens is that if you don’t have much in the way of non-gaming amenities, you really have nothing else to give that guest but free play. That did work at first, but now it has gotten out of control.
I think that non-gaming amenities are critical—it is what the guest wants, we have seen that. It started in Las Vegas originally, but we have certainly seen that in some of our markets and in particular where we just opened in Cleveland. The non-gaming amenity revenue has been huge for us. It allows us to offer other things to the guests instead of free play. But our competitor doesn’t really have that, so they continue to push the free play.
So I think the way to get away from free play is to have other offerings, but not every regional casino can afford this. Sometimes it does not economically pencil out to add those amenities. But that is certainly a shift in the spending habits of the guest… they are willing to spend lots of dollars in nightclubs, dinners and entertainment.
Miller: We operate in a lot of markets where our facilities do not have the amenities other properties do. What we are finding… is that the one thing that hasn’t changed in the industry is the importance of service. Providing good service is important but you need to go beyond that; it’s really about building relationships. It is an easy thing to say, but a difficult thing to execute. You have to be able to build relationships with your guests so when they get that free play offer that is 50 percent higher from the place down the street, they don’t necessarily feel compelled to go there just to play the credits, because they get so much more out of their experience with the people they know at the property.
When I worked on the Gulf Coast in the early days of Grand Gulfport and Grand Biloxi that was absolutely the case. We all sort of shared customers, but the relationships that were built between the employees, the market and the guests that came from all over the Deep South… I have never seen relationships like that. It was easier then to hold onto a guest because those relationships were so strong. Now there are a lot of other things tugging at them, but at the root of it I still think that is job one, to develop these relationships.
Varnes: One of the goals in our company is to build the best relationships with our crew as well as our guests. The reasoning behind that is because when you do screw up—and we all screw up at some time—the customer is more willing to forgive you because of the relationship. For example, we have a 24-hour restaurant and we get a little backed up sometimes. We have one guest who is there all the time and she will jump up from behind her table and go grab menus and seat other guests. She is so excited to be part of our family and part of our team… it is that type of relationship.
Barber: This is a debate we have on an ongoing basis. From an employment standpoint, the needs and wants of a younger generation employee has dramatically changed. They work to live, not live to work; so time off, schedules, and day of week are very important to them. In our 24/7 industry, where 60-70 percent of your revenue comes on the weekends, that is not necessarily conducive to a younger generation schedule or lifestyle, they typically want time off when we are at our busiest. It has become a struggle to attract and retain that younger employee.
Varnes: We are still struggling with it from an employee standpoint. The younger group that is coming out, the sense of entitlement in which they were raised… we struggle on how to tackle that, because they will work a little bit, then they will not want to work anymore. The amount of surveillance I’ve seen with them using their phones throughout the day… it is second nature to them and it is really hard to explain that you really can’t do that at work…
Hoskins: I wish I had all the answers, but I have seen some interesting things I have never seen, like recently I saw a parent come with their child to the interview. Another parent called me the other day and told me we were all wrong in the way we were treating their child.
I think there are a lot of challenges out there, and we will just have to learn as we go along. On a positive note, our newer employees at that lower-level worry about whether we are green or not, how much we give to charity and where we donate time. So it is not all bad, there are some very positive things about dealing with the Millennial generation. We are trying to engage them, have employee programs that appeal to them, whether it is music, entertainment or other such employee events. As time goes on, I think these issues will work themselves out.
Lucas: You need to change and adapt. That is the key to success in any business—realizing that change is a good thing and adapting to it, whether it involves how you operate your business or how you deal with team members or employees. We are all going through this now—you just have to handle your team members differently than when we started in this business. You have to handle your guests differently too, that is a changing demographic as well.
CASINO OF THE FUTURE:
Barber: I think gaming operations in the future will be more mobile. They will be more online or Internet based. We will continue to see brick-and-mortar properties invest into what we refer to as hospitality or non-gaming revenue streams. So you try to match the demographical needs and wants of the customer of tomorrow. It is about giving them more choice; letting them have a say in the content and the games themselves, letting them enjoy the experience the way they want, to individualize the experience.
Hoskins: I think it is technology and options. I look at my kids and they live and die by the mobile phone; take it away, and there is nothing worse. That’s the way it is, the iPhone is where they get their news and how they order things. And they are fearless. I still cringe when I have to supply my credit card numbers to a site, but they don’t think twice about it. Ten years ago, I could not imagine texting. Now, I text 30 to 40 times a day.
It will be a different experience. Non-gaming attractions will get them in the door, and we will have to figure out how to get those social games into our mix so we can thrive from this visitation.
Lucas: I think technology will continue to evolve. I think you will see changes in slot and gaming floor layout that will be more appealing to the Millennials and what they like. They are into communal and social media, so that will have to be integrated in. People want an entertainment experience, so I think you will see less of slots in a box and more of full service facilities with lots of non-gaming amenities.
Miller: I think right now if you look at the way casinos are built, by virtue of the way we lay out the slot floor and the gaming pits, we dictate where and how people play the games. That is all going to change. In 10 years I think the casino will look vastly different than it does today. I think it will look more like a lounge with different environments in different areas where people can go to where they are comfortable and bring their game on the iPad. We will still control the content, but they are going to control the environments. They will select where they sit and what room they want to play a game in, rather than us.
The power is shifting… it has always sort of been in the guests’ hands, but it is shifting more and more that way. I think we are going to go well beyond the slot box; probably to an iPad where the guest will pick from the thousands of different games themes that are available, and play it where and when they want.
Varnes: I was at a hotel conference recently and two things really stood out to me. The first was that although we talk about Millennials as a separate generation, so many of us, no matter what our age, are acting like Millennials. We are using the same devices. We are using the same technology. It isn’t just about our age, but how we act, and some of us act younger than what we are. That rang true to me… so it is not just the age demo we are going after, it is the technology that people are using however old they are.
The second thing is when we go to our hotel rooms, we use two or three devices. We pull out our laptop, iPhones and iPads. We want to make sure all three are streaming quickly and that we have the right bandwidth and all that. That is what everyone wants… you do not need to be a Millennial to appreciate quick and easy access to electronic devices.
MARKETING TO BOTH CORE PLAYERS & MILLENNIALS:
Lucas: I think it is a big challenge, but you have the diversity on the gaming floor to accommodate both. You certainly do not want to drive that older customer out, but you do want the floor to be conducive to building that Millennial market. It’s just like you have different areas of your floors with different denoms and themes, I think you do the same thing with demographics. You have to create some areas that are going to be appealing to each of these segments.
Miller: From a marketing standpoint, I think we need to get away from what used to be standard direct mail campaigns. You have your monthly campaign, your new member campaign… we have to think differently about how we communicate with people. There is a segment of our database that still wants that piece of mail; they still want to have it in their hands with their coupons and their offers. But the thing about the Millennials and the younger folks: they want nothing to do with a piece of paper. Don’t send them anything in the mail, just text it to or e-mail it to them, so they have it on their PDAs.
It’s even a different approach to websites. Those of you that are offering websites… if it is not optimized for handheld devices, you are outdated. Laptops are going away. Everything in the not too distant future is going to be done on an iPhone or iPad. So you have to make sure when these younger folks are looking at your product and considering coming to visit your property, that you are presenting something that is attractive to them. It is a big paradigm shift for a lot of properties.
Barber: There is a new psychology at play here as well; essentially, when it comes to age, 50 is the new 30. So having products and services that attract a younger customer lets the older customer also feel good about being there.
However, establishing such a social environment is not easy, whether it is on or off the casino floor. The one analog I can offer is in the nightlife business. At times and you can get 4,000 people in a nightclub rocking at 4:00 am; and it is a very different scene from a customer just sitting at a slot machine at the same time. Finding a way for these amenities, products and services to co-exist and be totally integrated into a property can be a challenge. But I do think the notion of having different customer segments all together does help the entire property and creates a good vibe and energy to the overall experience at any facility.