When it comes to choosing non-gaming amenities for the modern casino resort, there are plenty options for operators to consider including golf courses, water parks, nightclubs and shopping malls. However, the most financially feasible and lucrative of all these non-casino choices are hotels and parking garages, according to a panel session entitled “Economic Diversification: Non-Gaming Amenities and Beyond” that took place yesterday at the Global Gaming Expo (G2E) in Las Vegas.
“From an investor perspective, the casino remains the economic engine of the resort property… it is the thing that has to be maximized,” said Kristi Jackson, chairman of TFA Capital Partners. “So with this perspective in mind, when you look at non-gaming amenities, a hotel should be at the top of the list since it can best provide incremental revenue for the casino.”
According to Jackson, a properly designed and sized hotel that is operated using a data-driven strategy can generate upwards of $200-$300 in incremental revenue from a customer per night. If this hotel also averages 90 percent occupancy, it can produce an ROI in just a few years; making it extremely attractive to investors.
“There is plenty to talk about when considering non-gaming resort amenities—where the property is located, what the competition has and what customers want,” Jackson said. “But what most investors want to see is a hotel.”
Rich Emery, president and design principal for Thalden Boyd Emery (TBE) Architects, concurred with Jackson’s observation about the value an hotel addition to an existing gaming resort, citing a study his firm recently conducted that examined the incremental gaming drop generated by certain non-gaming amenities. According to this study, hotels increased casino drop by 20-40 percent, in addition to the revenue created directly by the hotel.
The non-gaming amenities that produced the highest increased drop for a casino were, surprisingly, parking garages, which boosted drop by 74 percent. “Most operators will say they do not want to spend money on parking garages because the return on investment is not there,” Emery said. “This is not the case. A parking garage makes gaming more convenient to the consumer. It can take some of the worst weather days with rain, snow, sleet or extreme heat and make them profitable.”
And the amenity that generated the least when it came to casino drop? Golf courses, which produced a paltry 4 percent average uptick. “Everyone wants a gold course and sometimes it makes sense, but on average it does not,” Emery said.