Money is a Motivator
A business case can be made for focusing on non-gaming experiences in Canada. Revenues from the Las Vegas Strip are no longer dominated by casino gaming. In Las Vegas, approximately 65 per cent of revenues result from non-gaming activities such as entertainment, food and beverage, retail, and hotels. Gone are the days of cheap buffets. There’s a “premium” culture on the Las Vegas Strip that gives the average person a sense of accessible luxury.
Our experience working across Canada suggests that non-gaming revenues contribute significantly less on average to total destination revenues when compared with gaming revenues. In fact, many Canadian operators have even been losing money on non-gaming amenities like dining and entertainment. In recent years, we have noted a shift away from the loss-leader model – with a few notable exceptions – instead, treating each unit as a profit centre.
There is an incentive for Canadian casino operators to rethink their relation to non-gaming activities. In many provinces, operators do not share non-gaming revenues with their crown partners. First Nations casinos also typically retain 100 per cent of the revenue from non-gaming activities. While crowns may not get a share in the money from non-gaming activity — they will certainly reap the benefit when the public perception (with the associated social licence) improves. If the public sees casino destinations as more than gambling dens the net effect will be to attract new audiences. It’s a win-win.
So how can Canadian operators activate the opportunity and enhance their non-gaming offering to increase their topline revenues, overall profitability, as well attracting new and infrequent patrons? It’s easy to feel like you need to meet the needs of each individual prospect and customer. In fact, strategically, it is easier to define and develop specific experiences to appeal to targeted groups of patrons and prospects based on shared preferences and motivators. It is also important to define the right metrics relative to your business objectives, so that you can evaluate performance and course-correct when needed. Often casinos are spending money on activities that have low perceived value by their customers. It’s important to invest where you’ll have the most impact for your audience.
Loyalty Alignment Between Gaming and Non-Gaming Activity.
There is an opportunity to use loyalty programs to activate non-gaming amenities. Most casinos allow patrons to redeem the points they earned gaming to purchase meals in restaurants or theatre tickets, but operators have not yet developed an approach to valuing and rewarding non-gaming behaviour. We know this is something large international operators are working on and Canadians, as they consider growing revenues from non-gaming activities should be proactive with this opportunity.
Ultimately, the Canadian operators, crowns and suppliers need to work together to change perceptions so as to attract new audiences. Casinos need to be understood as engaging entertainment destinations. And the experience must live up to that promise. There is a large audience of social, entertainment seekers in Canada, with disposable income. Casino destinations can win wallet share if they help potential customers understand the new realities of the casino industry. Offering innovative non-gaming amenities, that are market appropriate, is the path to engaging with this audience. And, if executed properly, the improved revenue streams will follow.
Side Bar/Call Out:
What we have learned from the Vegas experience:
• Vegas is not a casino destination.
• Non-gaming amenities should be profitable.
• Amenities matter – they’re important points of difference in a competitive market and create a total entertainment experience, attracting a wider audience.
• When planning new experiences don’t alienate your core customers while rolling out the welcome mat to new and infrequent patrons.
• New experiences and amenities must be market-oriented and tested with your current and intended customers.
• Don’t underestimate the value of non-gaming behaviour. Recognize and appropriately reward your amenity users.
Kara Holm is the ExO for Strategic Insights & Application with All-In Gaming & Hospitality Advisory Group Inc., a founding partner of mobile game developer Play the Field and Curator of the blog www.itisadirtyjob.com. All-In is an innovative Canadian-based think-tank that offers a unique, all-inclusive perspective that considers the customer, operators, and government agencies and regulators in the delivery of gaming experiences and associated revenues. Web: www.all-inadvisorygroup.com; email: firstname.lastname@example.org; phone: (902) 830-4884.