Gaming industry’s next big innovation may be in the back office
I didn’t find the “Next Big Thing” to revolutionize the casino industry during last October’s Global Gaming Expo
It wasn’t for lack of impressivetechnology on display at G2E. But in my experience serving casinos and hotels, I’ve seen the most impactful innovations happen in a property’s back office, not a trade show floor.
The innovation I’m talking about doesn’t involve any lines of code, either. It’s about reinventing the way your people work together, so that all your departmental leaders prioritize collaboration and integration, long before the fancy new systems are installed.
Gaming companies are right to seek technology to manage the complex analytics to value their guests holistically, reinvest in them intelligently and market to them digitally. There’s more data than ever for these strategies.
But revenue strategy has two equally important pieces: a technology shift and a cultural shift that sets up your property to get the greatest return on investment in that technology.
CULTURE COMES FIRST
I think the fundamental, structural challenge at the staff level holds casinos back from achieving a technology breakthrough, so I encourage companies to start with culture first.
With new gaming clients, my team often sees a misalignment at a property that usually begins with the casino operations team and hotel team having different goals and incentives, working from disjointed sets of data stored in different systems. One department wants to maximize gaming revenue, the other is more concerned with cash ADR and occupancy, even though both have a role to play in growing total-resort profitability, which should be the number one priority.
Inefficiency spreads. The marketing department often gets caught trying to support initiatives for the casino and hotel with separate campaigns that work at cross-purposes. And from its silo, the IT department is in the middle of all of it, trying to procure and support systems—probably too many systems—to enable every team.
When all these departments are pulling the company in separate directions to hit their individual KPIs, they inadvertently undermine the technology they’ve purchased.
If the casino and hotel teams can’t agree on which guests to sell the rooms to, the best-rated players with the greatest theoretical win may not be around to put their money into the fancy new slot machines on the gaming floor or high-value transit customers might be closed out. If that effect is replicated even a little bit every day, how much longer will it take the property to achieve the return on its technology investments?
COLLABORATION IS FUNDAMENTAL
Gaming companies can’t leverage innovation until they master collaboration. Casinos certainly recognize the challenges before them. There were many thoughtful comments that I heard in the G2E panel session I joined or in conversation with some of our partners, dealing with the continued rise of non-gaming revenue and the ongoing quest to bring personalization to loyalty programs designed to serve all customer segments.
But alignment comes first. To implement a casino revenue strategy, get everyone focused on the same over-arching goal: to increase total-resort profitability.
To make the most money for a casino resort, each team will have to get used to some give-and-take. The casino team might have to let go of its room blocks and let the hotel yield those rooms dynamically. The hotel can reinvest in a high-value guest who doesn’t gamble at all but nonetheless spends thousands of dollars throughout the property.
The hotel managers can live with lower cash revenues, as long as they work with casino marketing to maximize the theoretical win or on-property spend they can drive from the guests they comp and to those offered a discounted casino cash rate. How to set up the org chart to achieve this will look different for every company. Overall, having accountability for all revenue coming from the different sources of your resort—gaming floor, hotel, retail, F&B, etc.—roll up to a single person is important. It’s also essential to align your staff’s individual KPIs with a compensation plan that rewards people for driving profitability.
INSIST ON INTEGRATION
The ecosystem of technology vendors focused on the gaming industry has been small and specialized. Naturally, there has been a lot of “home brewing” of legacy, on-premise systems that casinos developed and maintained themselves over years, if not decades.
The gaming industry is at an inflection point where technology that didn’t exist 10 years ago can now handle complex needs for analytics, CRM, marketing, distribution and property management. The challenge for gaming executives, especially those responsible for IT, is to require all the property’s technology vendors to work together as well. If your patron management system doesn’t integrate with the RMS, marketing automation solution, CRS or online booking engine, there is no clear path to an ROI for any system, let alone for new strategies trying to make use of those tools.
If your technology partners don’t integrate with other vendors you use or would like to use, replace them.
A well-architected technology stack, combined with a more collaborative culture among your staff, really enables a gaming operation to scale. Get every team to log in to the same application for reporting, which would use common data from a single source of truth, and watch them communicate more effectively and execute difference-making strategies.
When the groundwork is laid at the foundational level, you’ll be ready to tackle the high-level technology decisions. There will be plenty of those questions: Are you tracking customer spend from everywhere on the property? Are you leveraging analytics and data science to make the best pricing and reinvestment decisions?
But don’t prematurely raise the stakes before you’ve paid the ante. Focus on the strategic way to address structural problems for the long-term health of your business, and start by leading your different departments toward shared profitability goals.