When Pechanga Resort Casino held its grand opening event in early March to commemorate the completion of a two-year expansion project, it was an evolutionary step that affirmed the long-term vision of its owners, the Pechanga Band of Luiseno Indians.
The $300 million addition doubled the number of hotel rooms at the Temecula, Calif.-based property; added a 4.5 acre pool complex; a two-story spa; new meeting and event space; two new restaurants; and a 2,400-spot parking garage. It represented a great leap forward in the material sense, but it also affirmed the tribe’s long-term strategic view.
“Almost 20 years ago we started our journey toward self-sufficiency,” said Tribal Chairman Mark Macarro. “It’s a journey that has allowed us to provide for our people and the community, improving the quality of life along the way. This expansion represents the next leg of our journey to continue our viability and enable our competitiveness. As our region grows and matures, we must do so as well to position ourselves for the next 20 years. We believe this will take us there.”
“We are taking the resort gaming experience in Southern California and beyond to the next level,” added Pechanga Development Corporation President Jared Munoa. “Of course, none of this would be here if it wasn’t for our loyal employees and guests who continue to visit and continue to talk about their positive experiences with friends.”
Meanwhile, on the operations side, “Our goal here and our strategic foundation is for us to be the premier destination casino resort out there,” said Lee Torres, general manager, Pechanga Resort & Casino, in a presentation at the AGS GameON user conference, which was held at Pechanga in June. “All the things that we do fit under that umbrella. We feel this type of project could achieve that. As the economy continues to improve and as tourism in Southern California continues to grow, we have a lot of people who are visiting this area. Temecula has wineries, an eclectic Old Town district. People were coming here to visit us and there’s just a lot more to do in the area so this is a way to drive new customers.
“Next it was an opportunity for us to differentiate ourselves from our competition. We operate in a very, very competitive market here in Southern California. The competition includes all of the casinos down here and Las Vegas, to a point. We don’t react to what our competition does; you’re not going to do a $300 million expansion just because someone else is doing something. But it’s part of the consideration.”
In terms of the Vegas impact, Torres said it’s mostly about expectations. “When we talk about Las Vegas, I think it’s a little bit different experience now,” he said. “They’ve shifted over the last decade to prioritize the non-gaming side a little bit more. We look at it not necessarily as a competitor in terms of them possibly stealing trips from us; our guests are going to go to Las Vegas sometimes. It’s about how Las Vegas potentially influences the expectations of our guests. If they’re used to a certain kind of product in Las Vegas, they’re going to come back here and ask us if those are things we’re willing to consider.”
“As we continued to build our database, driving more VIPs to the property and giving them an amazing experience once they were here, we started to see an influx of guests at the higher levels,” said Torres. “And what we were running into, especially on the weekends, was, for example, a guest from Los Angeles saying, ‘Hey, I want to come down tonight, I don’t want to do a two-hour drive there and back, so I need a hotel room.’ And we would have to say, ‘Unfortunately, we have 517 other VIPs who already booked rooms so we can’t put you up at the hotel.’ That’s not very conducive to building loyalty with your best guests.”
MANAGING THE PROCESS
Before deciding exactly what to build, Pechanga wanted to make sure it understood its guests’ expectations. This involved a lot of focus groups, surveys and hosts speaking directly to VIP guests.
“They said, “we needed more rooms, they had to be nice, modern and sophisticated,’” Torres said. “They said, ‘I need more places to dine. You have a lot of restaurants that are great but, if you want to come here more frequently, I need more variety.’ They said, ‘the spa was too small and not luxurious, give us a luxury spa.’ And then it was retail…‘You guys give us awesome comps but we want cool stuff to buy with the comps, so we expanded the amount of retail square footage.’ Then the final one: ‘Lee, if you’re going to do anything, you need to fix the pool; it doesn’t fit a four-diamond experience.’”
The two-year project was really a longer-term endeavor. “I think every time you do a construction project people usually focus on the build itself; that was two years and three months,” said Torres. “The whole project was probably closer to four years; you’ve got all the planning that has to happen in advance: feasibility studies, environmental impact reviews, revenue and forecast models. And once you decide to go ahead, you have to decide on the architectural designs, what you are actually going to build, and agreements to work out with the city and the county.”
The construction period admittedly caused a lot of disruption for Pechanga guests and Team Members. But by Torres’ account, they grumbled for a little bit, quickly became okay with it, and then got really excited by what lay on the horizon. “By all common business standards: financial; efficiency; team member engagement; guest satisfaction…you expect there would be some declines or slowdowns, but because of the team members that we have, that didn’t happen,” said Torres. “We experienced growth across almost all of those areas over that two-year period. Guests would tell us it is a pain to get where I want to go. If they’re on the freeway for an hour-and-a-half, the last thing they want to do is then try to deal with our construction impacts. But once they got inside they said team members still gave them the best experience possible. So over that two-year period, our guest visitation did not decline. We would take surveys and guests would say, ‘we’re still going to come, we just can’t wait until you’re done with the project.’ That was very rewarding for us, to see that sort of response both from team members and from guests.”
Their support was critical, not least because the disruptions were very real. The new garage construction meant a large surface lot had to come out, as well as another lot where the pool now sits. Torres recounts that it was one of the more popular customer lots. “And then we couldn’t access the garage where all of our team members had parked,” said Torres. “We had to pave an exterior lot about one-third of a mile from the property. Then we would have to shuttle them in, thus adding 10 to 15 minutes to each side of their work shift. So the expansion impacted 20 or 30 minutes of their personal time in order to get to work. What was great was our team members understood what we were doing and why we were doing it. They are so focused on providing our guests with a four-diamond experience that they did it with their heads held high. We persevered through this.”
Communication was key. “We knew the experiences for guests were going to be much different than they’re used to, and for the team members as well, so we had to devise plans to approach that,” said Torres. “The first thing we said was let’s be very, very open with our guests and our team members. Tell them what’s happening; when to expect closures; and how you can access the property. We used direct mail, e-mail, social media posts and videos.”
And there were tweaks to the original plan. The new garage was not connected to the casino and, as it was being built, Pechanga decided to make it more efficient and easier for guests. “Within the garage itself we added sensors for each space so as you pull up you see exactly how many spaces are available at each level and when you get to the level the light dictates whether the space is open or not,” said Torres. “We track that information on dashboards so we know exactly what capacity the parking garages are at. Given that is wasn’t connected to the building we built a covered walkway and we also added a moving sidewalk.”
THE END RESULT
It has been nearly a quarter-century since the Pechanga tribe took its first steps into the gaming industry, and those who were there at the beginning have a unique perspective on the present. “What was amazing for us as operators was getting a sense of the pride that tribal officials had,” said Torres. “You had to take as step back and reflect on where the Pechanga tribe started. In 1995, it was the Pechanga Entertainment Center, which was literally tents and trailers and nine-foot buildings all hooked together. The approach was get as many of those coin-operated slot machines as you can to fit in it. It also offered bingo and very limited food and beverage offerings. And they did it with fewer than 100 people and about 100 slot machines. The tribe has really come a long way from a business standpoint and we are very proud to be part of that.”
Today, Pechanga’s new Resort Tower has 568 additional rooms and suites, bringing its total to about 1,090. Five new room types were added to Pechanga’s lineup with the addition. The second tower complements the other 522 rooms and suites in the Casino Tower.
The new room types include Deluxe Room (400 square feet), Junior Suite (550 square feet), Corner Suite (650 square feet), Deluxe Room with open air patio (on the fourth floor Zen Roof) and Corner Suite with open air patio (on the fourth floor Green Roof). Each of the new rooms comes with 55-inch and 65-inch flat screen TVs, at least eight USB charging ports, HDMI cable, Room Cast to stream personal content to in-room flat screen TV, eco-friendly smart lighting that turns room brightness down 70 percent when not in use, button-controlled hotel service and do not disturb indicators that instantly alert housekeeping staff remotely.
Spa Pechanga now incorporates native healing techniques and botanicals into its treatments and overall holistic view, something essential to weave into the new spa for the Pechanga tribe. “We felt that was critical to bring this aspect of our culture here,” said Christina Fletcher-McMenamin, first vice president, Pechanga Development Corporation. “These plants and herbs were used for many thousands of years by our ancestors for nourishment and medicinal purposes. They really bring a therapeutic aspect of healing of which our guests can now enjoy.”
Nearly 70,000 square feet of additional meeting and event space was added, as where two new rrestaurants. The new event and meeting space provides ample room for trade shows, conventions and what so many guests want and love, more and better entertainment. “We are now getting acts like Steven Tyler, Pitbull, country singer Cole Swindell and comedians Adam Sandler, David Spade, Rob Schneider, Nick Swardson—all of whom performed in one show,” Torres said. “With the additional hotel and food and beverage offerings, we’re able to accommodate thousands of concert fans one night, and trade show and corporate guests the very next day.”
But one new amenity seems to top all the others. “The shining star of the project that everyone wants to talk about: the four-and-a-half acre pool complex that we call The Cove,” said Torres. “It has four pools, three hot tubs, 27 cabanas, two water slides and an incredible, huge swim-up bar with 18 underwater seats.”
At the time of the expansion’s groundbreaking in December 2015, the intention was to have everything online by New Year’s Eve 2017. “I’m happy to say that on December 22, 2017, you could stay in the new rooms, you could eat in the new lobby restaurants and you could use the spa,” said Torres. “The retail shops came in a couple of weeks after that, but it was OK because we left the existing retail shops open. The only thing that had somewhat of a significant slip for us was the pool area. We had more than the usual amount of rain during this two-year period. By March 2018, we were able to use it for our grand opening event: A VIP reception at the pool for our guests; Steven Tyler performing at the property; and a rooftop fireworks show.”
Six months into the rooms being available and three months of the pool, Pechanga continues to survey its guests. Torres said the overall feedback is, “’you guys listened to what we wanted and you’ve given us this great product. The rooms are awesome; the spa is great; the pool is amazing. I have no reason to go anywhere else, including Las Vegas.’”
“That was one of the goals… to provide a premiere resort destination that could compete with anywhere,” said Torres. “We feel like we were able to achieve that. From here on out, we’ve set our sights on continuing to improve our product and guest service to the best it can possibly be. We invite anyone to put us to the test. We think you’re going to like what you find.”
Revitalized Pechanga Resort apt backdrop for annual AGS user conference
AGS has established a pattern with its GameON user conferences, the third annual version of which was held last June at Temecula, Calif.-based Pechanga Resort & Casino.
The program is light on product info and heavy on quality, objective educational content. The company also shows plenty of personality, and it’s not just for show. GameON was again a lot about sharing with the operators in attendance how AGS endeavors to conduct business and what its values have been and continue to be, now as a publicly-held company.
The table was set by David Lopez, AGS president and CEO, who took the audience of about 100 operators through the company’s recent history. AGS was acquired by Apollo Global Management, whose vision was to build a more robust global gaming supplier. The company was doing about $30 million in EBITDA at that time and this year that number is projected to come in around $130 million. Among the key steps in the interim was the acquisition of Cadillac Jack, which doubled the size of the company in terms of employees and game installments.
The company now has 616 employees. There are nine offices, plus another one coming. The number includes game development studios in Austin, Texas, Atlanta Ga., and Sydney, Australia. The total number of R&D employees stands at 182, up 38 percent year-over- year. “That’s about how much we’ve grown from an EBITDA point of view,” said Lopez.
AGS went public in January and is listed on the New York Stock Exchange. So far, so good; the stock was initially proceed at $15 per share and selling for around $25 at the time of the conference. Meantime, AGS wants its customers to know that it is keeping its eye on the ball.
“The IPO doesn’t change anything, I hope, from a customer perspective, and it certainly doesn’t change our mission and values,” said Lopez. “To pick a few, aspire to win is one of my favorites. Why? Because we hate losing. Love the game is another primary value. Our R&D folks love what they do. ‘Act like a CEO,’ is a sign outside my office. That just means that we empower our people to make decisions. If you’re ever waiting too long for an answer, text me.”
He then gave his phone number out, which happened a couple of times during the user conference.