As operators ponder the post-COVID-19 closure landscape, a balancing act between safety and results with an accent on the former is taking hold.
Attitudes are being driven in part by the experience in Macau, which a number of leading U.S. operators have experienced directly. Casinos closed there on Feb. 1 and reopened three weeks later with a number of now familiar-sounding restrictions: Patrons and employees were expected to wear face masks; there were temperature checks at the doors to screen for health and a number of social distancing rules were imposed; about half the tables were closed, baccarat tables that used to have seven players at a time were capped at four, and congregating around the tables was eliminated. With that, Macau revenues were down 88 percent year-to-year in February and, more telling, about 80 percent in March.
“There is customer uncertainty and nervousness,” said Geoff Atkinson, senior data analyst, Management Science Associates, Inc., speaking in a webinar entitled Outlook for Gaming in the Context of COVID-19 that his firm co-presented with Spectrum Gaming Group. “Not everyone is going to rush back as soon as you open the doors; that’s a big lesson for the U.S. When governments give the OK to open casinos, not everyone is going to have the confidence to go there as soon as they can.”
Similar notes about the economy were sounded in Gaming in Crisis: The Path Back, a late April webinar that was led by The Innovation Group. “What will unemployment be? Where will consumer confidence be?” asked Bobby Soper, president and CEO, Sun Gaming & Hospitality. “The problem is that on the spectrum of possibilities, no one exactly knows where we will be upon reopening. Or in six or 12 months. That makes operational and financial planning difficult. Flexibility and adaptability are important. The planning that is beginning now should accommodate different assumptions and scenarios. For example, staffing plans might accommodate casino floors at certain utilization levels and hotels at various occupancy levels. Maybe we start at 25 percent and ramp up to 75 percent within six months. Or maybe start at 50 percent and ramp up to 75 percent in three months.”
In his presentation, Soper shared his conversations with a broad range of operators around the country. A summary of his findings follows.
- Testing: It seems a majority of properties are exploring and will likely be using non-invasive thermal cameras to screen temperatures at entrances for guests and employees. This will of course implicate numerous issues related to training, procedure, execution and guest privacy.
- Masks: There is an expectation, at least at this time, that guests will also be wearing masks. Of course, like many other procedures, this will also require feedback and approval of regulators.
- Social distancing: Social distancing within a casino will be a major challenge and require comprehensive planning, according to Soper. Let’s assume an environment with heavy social distancing measures is in place. For primary games, the consensus is that blackjack will see three patrons max per table, with a patron at each corner spot and one in the middle. For games with non-dedicated seats and spots such as craps and roulette, the prevailing sentiment seems to be to keep them operational but have a limit of three patrons per table. For poker, while some operators may give it a go, the consensus is that many will not reopen with the poker product in a stringent social distancing environment.
- Slots: The consensus is that in the current environment a number of units will be down, with every other seat in a slot bank dark with its dedicated seat removed. In this scenario, banks with odd numbers of machines provide a much greater revenue opportunity with the total units open, especially in space-constrained floors. Implementing some simple, limited space configuration changes on the floor may make sense in some instances, to extend or reduce banks to such odd-number configurations and maximize occupancy under social distancing rules, especially for those banks of machines that have the highest win-per-unit yields on the floor.
- Plexiglas barriers between machines: There is some consideration for this; but mixed opinion on how it would work, what the guest perceptions would be and related maintenance issues.
- Hotels: Operators are deciding between scaled occupancy versus leaving rooms unoccupied for a certain period of time (24-72 hours).
- Valet: The heavy consensus is toward no valet offered for now.
- Restaurants: Reduced capacity and new seating configurations will likely apply. Soper doesn’t know of anyone who will reopen with buffet in operation.
- Meetings and conventions: It is safe to say there will be a far reduced demand, both because of economic impacts and health and safety concerns. Also, operators are not sure how practical it is to pursue business meetings with special distancing requirements.
- The need for proactive planning: Regulators will be a key party to what happens. To the extent that they are receptive to it, it may bode well to approach them first with plans, even though you know the plans will change and continue to evolve. It will be mutually beneficial to them and you; the sooner you can learn what is acceptable, the easier it is to plan.
- Pre-opening exercises: It is extremely important for team members to experience the guest journey throughout the process, just like you would do when opening the property for the first time. Also, invite regulators so that there is a mutual understanding of expectations.
SOCIAL DISTANCING IS NOT ENTIRELY NEW
The good news on social distancing, per Atkinson’s comments, is that many customers have long preferred it.
Using data gleaned from the floor optimization tool of one of Management Science Associate’s clients, Atkinson looked at individual machines, when they were getting played and when the adjacent machine(s) was getting played at the same time.
“I took a collection of Fridays and Saturdays, assuming they would be the busiest times for these banks of machines,” Atkinson said. “Even on Fridays and Saturdays we don’t see people playing adjacent games all that frequently. The rate was less than 5 percent for video slots and video blackjack. It’s a little higher for video poker for a couple of reasons. Video poker players tend to play longer sessions, so it’s more likely that they will overlap with someone else coming in. Secondly, this particular bank of video poker machines had two of the same games on the end and two of the same games in the middle. It was those middle machines that proved to be the most popular.
“Looking at this data and the data from Macau, the first challenge for casinos isn’t to get people spaced out properly, you need to get people to come back,” Atkinson added.
Atkinson outlined several other questions that operators need to ask themselves:
- Game selection: If you have to reduce the number of games from 1,000 to 600, for example, what mix of games is going to generate the best results?
- Layout: How do you rearrange different sections of games? Do games get played more when you put them near each other?
- Marketing: If there’s a limitation on crowd size, that’s going to make casinos re-prioritize. Who do they want to get into the casino right away? Properties may decide to focus on VIPs.
- Game configuration: PAR (probability accounting); do you want that to be higher to recoup losses? Do you want to lower the PARs to attract as many players as possible? The answers might be the same as they were before the shutdown.