My latest Las Vegas Business Press column is out, in which I dissect the June Nevada numbers:

The June results are in, and whatever the national economic picture, one thing is certain: Nevada gaming remains moribund. The figures released by the Gaming Control Board aren’t much cause for optimism, though things look a little better for Southern Nevada than for the north.

via Las Vegas Business Press :: David G. Schwartz : Latest data provide little optimism for gaming.

Basically, even without the incredibly low bacc hold on the Strip, it wasn’t a good month for the state, as slot handle continues to fall and table handle is mostly kept afloat by high levels of bacc play, play which happens in maybe a dozen casinos. But even if the bacc hold percentage had been more in the house’s favor, it still probably would have been a flat month.

Also, an interesting article in the LV Sun about the decreasing number of slots in Nevada, something I’ve written about. I’ve got one question: if it’s just a matter of having more games on each slot, why has the statewide win per slot only inched up slightly ($108.76 vs. $110.04) since 2004? The total win is declining in addition to the total number of slots, so each slot is doing about the same about of “work” it was six years ago, multiple games or not. Sure, the counter-argument is that revenues would have declined more without the game menus, but still, there hasn’t been a real increase in per-machine revenue generation yet.

My interview with Steve Inskeep of KNPR’s Morning Edition has aired:

Las Vegas just added a bit more bling to its famed Strip with the unveiling of a new marquee for The Cosmopolitan — a resort-casino opening at the end of the year. There already are questions about how the city will absorb another 3,000 hotel rooms. Las Vegas has been hit hard by the down economy and is struggling with a glut of rooms. David Schwartz of the Center for Gaming Research at the University of Nevada Las Vegas talks to Steve Inskeep about the city's fortunes.

via Does Las Vegas Really Need Another Hotel-Casino? : NPR.

I had great conversation with Steve. It’s not an easy topic to discuss because there are so many variables. In the end, it seems like it’s just as much a crapshoot as anything on the casino floor. Which is ironic, perhaps, but maybe apt.

This week’s Las Vegas Business Press column takes a closer look at the game of baccarat, which is becoming more and more important on the Strip:

At the level of the individual casino, there are even greater swings of fortune. Unlike Nevada, New Jersey discloses separate results for each of its casinos. This allows analysts an eye into what can happen in a given month.

via Las Vegas Business Press :: David G. Schwartz : Baccarat and its wild swings crucial to Nevada.

You can read the original baccarat longitudinal microstudy here, if you want to see the numbers behind the column.

One question I sometimes get is what the value of all of these statistical studies are. The answer is that they add a very important dimension to understanding what’s happening around us, which gives us better insight into how to change it for the better. Becoming more reliant on baccarat–as its currently played in Nevada–has definite consequences for the industry and the state, some good, some bad. It’s important to talk about this as the trend is unfolding, rather than waiting until after it’sp already arrived. If everyone had been looking closer at the revenue jumps in 2005-2006, we’d probably had reacted much better in 2007 and 2008.

But numbers never tell the whole story, which is one of my issues with the “purely empirical” approach outlined by Gary Loveman in this Bloomberg profile. Gambling and tourism are hospitality industries, which start and end with customer interaction and creating an experience for the guest. Metrics are an important part of running the business, but they should support, not define, the approach. Whether you call it action, fun, or excitement, that’s what your “core message” should be.

In other words, it’s not “gamble at our casino, because we’ll offer you a competitive package of comps to get your $529 theoretical loss per trip.” It’s “come here and have fun.”

I’ve been thinking a lot about this angle because I spent much of the week at the Star Trek convention at the Hilton, where I was able to really immerse myself in fandom and talk to the people running the show. I’ll be spinning Vegas Seven and Business Press pieces out of my observations, which will also relate back to the “empiricism vs customer-centered” argument.

There were really a ton of great stories there, from both the fans and the actors.

It’s a happy day in UNLV gaming-land. An article I wrote a while back about how Las Vegas bounced back from the 1980s recession is out in Gaming Law Review and Economics:

MOST WHO HAVE CONSIDERED Las Vegas history have concluded that not much happened in
Las Vegas gaming between the openings of the original MGM Grand (1973) and Mirage (1989). In fact, several structural changes during the 1980s had already reversed a declining appeal. Responding to three crises—competition from Atlantic City, a national economic downturn, and the MGM Grand fire—Las Vegas casino operators began to draw more extensively on a middle-class mass market. Capitalizing on the “Burger King Revolution,” Strip casinos drew more gamblers who, on average, played less, and slot machines displaced table games as the industry’s leading revenue producer. This successful strategy broadened the city’s visitor pool and created a base for later expansion.
The Burger King Revolution: How Las Vegas Bounced Back, 1983–1989

Enjoy reading it while you can–I think that the article’s only available to non-subscribers for 2 weeks. If you’re a casino professional, you should definitely consider a subscription to GLRE, since it’s packed with informative articles.

I didn’t do too many interviews for this article–I mostly used documents–but I’ve got to say that Jeffery Silver was great to talk to. He was not only an expert on the subject, but has a keen sense of humor and was remarkably generous with his time.

The May numbers have been released from the Nevada Gaming Control Board, and while on the surface they seem to be not such bad news, they actually send a mixed message. Here are my thoughts, broken down by region.

Statewide
Across the state, the gaming industry continues to shrink–we’ve got about 2,500 fewer slots and 70 fewer table games, despite the addition of a major new Strip casino since last May (Aria). It’s the equivalent of the net loss of a big Strip casino.

Slot revenue increased slightly for the month (0.44%), but this isn’t a sign that slot play is picking up. On the contrary, statewide slot handle–the amount actually played by players–continues to fall. The bump in revenues was due to a higher slot hold percentage–6.06% vs. 5.58% in May 2009. The handle fell from $10,094,516 to $9,336,733. This is the lowest handle in years, and it is a sign that people are in fact gambling less in Nevada. The slot handle has been declining steadily since 2006; earlier gains in revenues came because of higher hold, not more play.

Tables told the opposite story: revenues were down because of lower-than-usual hold, particularly at blackjack (10.37%) and baccarat (8.40%). The usual hold for those games is about 12-12.5%. But handle was up–partially, but not completely, due to a rise in baccarat play. So table play doesn’t look so bad.

Las Vegas Strip
The Strip saw the same general pattern as the state, with greater extremes: the slot hold was higher (6.94%), the overall table and baccarat holds were lower (10.47% & 8.26%). The slight gain in table handle seems to indicate that higher-end play is stabilizing, but not leading a recovery. It’s worth noting that there are more tables and slightly more slots on the Strip, so overall, handle-per-unit is probably down.

Boulder Strip
My favorite barometer of local Las Vegas gambling followed the same pattern as the Strip, with even more extremes. Slot hold increased from 4.24% to 5.55% (still lower than the holds for Mays 2005-2007, and slot handle declined from $1,253,821 to $1,068,378.

Overall table hold was a catastrophic 8.02%, though the table handle was up. They got hammered at craps (9.01 hold%) and absolutely slaughtered at mini-bacc (-15.48 hold%–yes, they actually lost money!). It’s either lucky players, bad management, or something worse.

Washoe County
Up north, things were quieter and much more consistent. With a decrease in slot hold, both handle and revenues fell slightly. Table hold increased a bit, but again both revenues and handle declined. Washoe County continues to gently coast downward, with no end in sight.

So there’s really no conclusive lesson to be drawn, except that we are definitely not seeing a recovery of slot play, and any gains in revenues are coming because of higher holds, not more play.

When MGM Mirage changed their name to MGM Resorts International, I wasn’t bowled over. “Resorts International” is forever linked in my mind to May 26, 1978, and a big red hotel on the Atlantic City Boardwalk (sure, it’s been painted white for 20 years or so, but in my mind Haddon Hall will always be red).

But I figured instead of just blathering on about it myself, it would be a good idea to find two people who specialize in corporate branding from outside Las Vegas to get a better perspective on what the name change means to people who’ve got a broader view. I was lucky to talk to Alina Wheeler and Laura Reis for today’s Vegas Seven column:

Two weeks ago, company shareholders approved a name change: MGM Mirage became MGM Resorts International. It was a major change, but was it good business? According to two corporate branding experts, it was.

MGM CEO Jim Murren outlined the change as an “evolution” that “honors our heritage, better represents the growing global presence our company has today and positions us to move forward under a unified brand strategy.”

Laura Ries, president of marketing strategy firm Ries and Ries, and co-author of The 22 Immutable Laws of Branding HarperCollins Publishers, 1998, thinks this was a good move.

via Analyzing MGM’s old new name | Vegas Seven.

Really interesting stuff from both experts. I still think “MGM Resorts International” is way too long, and kept on tripping over it when I was talking about the company in a TV interview last week, but “MGM Resorts” or just “MGM” works fine.

Really good piece in the LV Sun today about the rise of phony online hotel reviews, and what travel sites are doing about them:

The rise of traveler-generated online reviews has forced hotel managers to contend with anonymous posts from angry or disappointed customers.

For people in the business of promoting Las Vegas hotels, it has also opened the door for sneak counterattacks in the form of bogus positive reviews created to boost their clients’ image among the traveling public.

via Customer may not have written that online hotel review – Tuesday, June 22, 2010 | 2:01 a.m. – Las Vegas Sun.

The potential for industrial espionage is just about unlimited with online reviews. With a lot of money at stake, I’m not surprised that some people would try this.

Looking at a few out-of-market hotels recently, I saw that one hotel owner responded to a negative review by claiming it was put there by rivals trying to ruin him/her. While that may have been true, it came across as paranoid.

When I look at online casino reviews, I assume that you’re always going to have a small percentage of cranks who aren’t happy with anything. Looking at all the reviews, though, you see trends emerge: if most people say that hotel is noisy, or has bad service, or has the best blueberry muffins in the state, it’s a fair bet that this is a genuine response.

As far as TripAdvisor goes, it judges just how happy guests were with their stay, rather than the amenities or value a property provides. For the top 20 Las Vegas hotels (as of right now), there are just 7 five-star hotels–the rest are 3, 4, and even lower.

That being said, unless there’s a widespread campaign to sabotage Aria, you’ve got to consider that they’re tracking far below the other resorts in their class on TripAdvisor–ranked at #66 in the market, they are below the Four Queens and Planet Hollywood. While some of this may be because guests at the Four Queens have lower expectations, the fact that other five-star properties are ranked sixty places ahead of Aria should be a red flag that there are, at the very least, customer service issues at the resort.

I’d agree with Professor Erdem that casinos should really be using the negative reviews to engage their guests. At the very least this will help to weed out the bogus reviews, and at best it will help them resolve some issues.

The Gaming Control Board has released Nevada’s April 2010 gaming revenue numbers.

To give everyone some perspective on the month, I’ve put together a new report: Nevada Gaming Statistics: April Comparison. This four-pager charts the performance of Nevada casinos over the past 7 Aprils. This month, we’ve got four reporting areas: Statewide, Las Vegas Strip, Boulder Strip, and Washoe County. This gives us the overall state situation, as well as foci for tourism (LV Strip), locals (Boulder Strip) and northern Nevada (Washoe County).

Metrics include:

* Total, slot, and table revenues
* Slot and table hold percentages
* Slot handles and table handles
* Numbers of tables
* Baccarat revenue, handle, hold data (statewide and Strip only)

You can find the report here: http://gaming.unlv.edu/reports/NV_april.pdf

So what do the numbers mean? Continuation of the trends that have been dominating since the fall, and something of a warning shot.

Overall, revenues for the state are down slightly. There’s a clear divergence between tables and slots: slot revenue declined by about 8%, while table revenues increased slightly. The divergence is clearer when you look at handle, the total amount played. Slot handle for the state declined by more than 6 percent–the lower hold explains the higher revenue decline. Table handle, though, was up by a little more than 1 percent. If not for bad luck at the bacc tables, table win would have increased.

Nevada April Gaming Stats--statewide

Ahh, baccarat. In April the chickens finally came home to roost. Since the January numbers came out, I’ve been warning people that since A) the state is relying more on baccarat win and b) baccarat has a great deal of volatility, eventually the odds will turn against the house. That happened in April. In recent years, the average baccarat hold has been about 11.5 percent. This April, it was only 8.48 percent statewide–about a 26 percent drop.

This is significant. If the state’s bacc tables had held 11.5 percent, the state’s bacc revenues would have been abuot $80 million instead of $59 million– more than $20 million more in money to pay salaries, and more than $5 million in tax revenues that the state could surely use. Baccarat can be lucrative, but it’s not a great base to build your tax structure on.

Looking more closely at the Strip, it’s clear that Aria’s just not giving the bump that people had hoped it would.

Nevada Gaming Statistics--April, LV Strip

Both slot revenue and handle posted small declines, even as the number of slots went up. Table revenues increased by about 5 percent, which didn’t quite offset the slot decline. Baccarat handle increased by about 23 percent, which is good, since the number of bacc tables increased by 16 percent. So as far as baccarat goes, at least, supply is keeping up with demand. April 2010 was the biggest April for baccarat play in history. But outside of baccarat, there really isn’t much recovery on the Strip.

Another noteworthy area was the Boulder Strip, which saw slot revenue fall by more than 23 percent, though a much lower hold (4.63% vs 5.15%) had much to do with it. Still, overall play continues to decline in the Las Vegas locals market.

Someone got hammered at the tables–table hold percentage fell from 12.93% in April 2009 to 6.63% in April 2010–a decline of nearly 50%. Handle was actually up by about 10 percent, but the dice just didn’t fall the house’s way this April.

So the theme of the month was volatility is not always your friend. With bacc win representing more than 7 percent of gaming revenues this month, it’s clear that the gaming business is becoming more of a gamble for everyone.

My latest Green Felt Journal piece is out, in Vegas Seven. I get to name-drop Heraclitus to sound sophisticated before talking about the redo of the Trop:

That’s because the only thing that doesn’t change around this town is change. There are few other places where anyone would even consider spending $150 million to “relaunch” a resort that cost $1.4 billion to build a mere seven years after its opening. But when that happened at the Aladdin/Planet Hollywood in 2007, few were surprised.

A similar change is taking place at the Tropicana, and not a moment too soon. One of the oldest resorts remaining on the Strip (it opened in 1957), the Tropicana, after an increasingly parsimonious corporate stewardship over the past few years, is enjoying a renaissance under the leadership of Alex Yemenidjian, chairman and CEO of Tropicana Las Vegas, and new president Tom McCartney.

The current economy dictates nothing too ambitious—certainly nothing like the 10,000-room mega-expansion previous owners Columbia Sussex mooted back in 2006. With a recent Tropicana financial filing admitting there is an “imbalance” in room inventory, it’s not a question of trying to add capacity, it’s about competing with bargain rates at younger properties.

via Transforming the Tropicana | Vegas Seven.

Interesting to see what’s going on there–and if you’re in town, enjoy the opportunity of seeing the casino in mid-change.

Great story from KLAS about efforts to police the seamier side of the Las Vegas casino pool culture:

Clark County Commissioner Steve Sisolak says what happens in European-style pools around the world doesn't necessarily happen in Las Vegas. "International visitors have increased considerably, and this is something that they've asked for," Commissioner Sisolak said. "There is certain behavior that's acceptable. There's certain behavior that's not acceptable… Lewd behavior will absolutely, 100 percent not be tolerated. That's not what this is about. It's not a party atmosphere."

The atmosphere turned into a hard-core party last summer at the Rio's Sapphire pool. Police arrested eleven people on a plethora of charges including prostitution and drugs.

"A lot of people said, 'What did you expect when you had a strip club running a swimming pool? You should have been able to figure that if you had dynamite and matches, they weren't going to mix very well,' which is true. I think we learned our lessons there," Commissioner Sisolak said.

Another undercover operation last year netted eight arrests for drugs and prostitution at the Hard Rock's Rehab pool party. "Nobody wants to abuse this, and if anybody gets out of line, appropriate action will be taken swiftly," Sisolak said.

via County Issues Warning to Las Vegas Strip Pool Operators – KLAS-TV Channel 8 News Las Vegas.

Here’s the story itself. I encourage you to watch it, if only to enjoy reporter Aaron Drawhorn’s read, which I think is one of the best in town.

There’s going to be a Metro detail policing this stuff this summer…I’m sure guys are dreading being picked for that one.

I’ve got a new Las Vegas Business Press column up, in which I discuss the historical context behind Wynn’s musings about moving to Macau.

Steve Wynn made headlines when he suggested he might consider moving the headquarters of Wynn Resorts Ltd. to Macau from Las Vegas. As always, Wynn's forthrightness points the way to a larger truth about the future of the casino industry.

Wynn Resorts is a Las Vegas success story. Since moving here in 1967 as a part-owner of the Frontier, Steve Wynn has been one of the city's prime movers.

He began making a mark in 1973, when he became the chief executive officer of the Golden Nugget, then a small downtown casino with no real distinction.

Wynn's aspirations outside of Las Vegas have always been an important piece of the puzzle.

via Las Vegas Business Press :: David G. Schwartz : When Wynn speaks, gaming listens.

I think that many of the so-called pundits have reacted more emotionally than rationally to Wynn lately, particularly since he’s become critical of the current administration, and that’s what’s driving some of the comments out there. We talked about this a little on the latest Vegas Gang.

Wynn’s political opinions and the possibility of his moving the headquarters of his company are, I think, two separate issues. It’s not like he’s threatening to go John Galt on us: he’s just saying that he might move more elements of Wynn Resorts to the city that is its top market. People give another prominent CEO grief for not living in Las Vegas, since that’s where the action is, and by this logic they should be demanding that Wynn spend more time in Macau.

The most fascinating thing about Wynn is that, like Jay Sarno, his career doesn’t have a single, predictable arc. If he did, he’d have just kept expanding the Golden Nugget or, at the very least, staying with that brand. Instead, you’ve had forays into Atlantic City, Mississippi, and Macau, with the sale of Mirage Resorts along the way. All the time, he was reacting to changing conditions. If things had gone differently in Atlantic City, he might not even have built the Mirage, or at the very least would have built it in Atlantic City, and casino history would be much different.

So it wouldn’t entirely surprise me if the next stage of Wynn’s career takes him in a completely different direction. It’s happened before and there’s no reason to think it won’t happen again.

My extended commentary on February’s Nevada gaming numbers is out in the Las Vegas Business Press. Here’s the start:

The February gaming revenue numbers for Nevada caused some cheer around the state and on Wall Street. Total casino win rose 13.9 percent, the first double-digit increase in nearly three years. But if this is cause for celebration, it should be a muted one; there are still signs that the state's gaming decline is far from over, and this resurgence is resting on an increasingly narrow reed.

For one, much of the increase was due to the calendar. The Chinese New Year, always a big gambling holiday, fell in February, while in 2009 it fell in January. With much of the increase in win coming from baccarat, a favorite game of visiting Asian high rollers, it is likely that the true organic increase in gambling was far more modest.

via Las Vegas Business Press :: David G. Schwartz : Gaming win is nice, but hold the celebration.

I wrote this as an counterbalance to what I perceive as the overly Panglossian view that you often get from reading other people’s interpretations of the numbers. Even in the face of decline, some were asserting that this was still the best possible result in the best of all possible worlds. And this isn’t much of a resurgence, since if you look at the actual levels of play for most games besides baccarat, they’re not that impressive.

I’ve been thinking a lot about something Tyler Cowen said at the APEE conference I attended last week. He talked about 4 different kinds of potential recovery from the recession: U, V, W, and L-shaped. Both U and V are rapid returns to the status quo ante bust, while W is a “double-dip recession.”

Well if you thought double-dipping was the worst scenario, you’re wrong: Cowen raised the possibility of an L-shaped recovery, which means that we’re not really going to recover at all–we’ll just limp along for the next 20 or 30 years with no economic growth. Ouch.

I don’t know what the prognosis for the national economy is, but it seems to me that there’s a very real danger that we’re looking at an L-shaped recovery for Las Vegas. I don’t want to spoil your mood too much so I won’t even mention Cowen’s pessimism about the local real estate market, but the tourist economy is facing some real obstacles to growth that won’t be willed away.

I’d like nothing more than to be proven wrong, and for the big increase in baccarat to lead to a revival of growth on the Strip. But until a broader base of people have more discretionary income, it’s hard to see how overall visitation to Las Vegas can increase.

A week ago today, Planet Hollywood officially became a Total Rewards property. In my latest Vegas Seven column, I talk a little about the behind-the-scenes work that made this possible:P

If you didn’t notice anything unusual at Planet Hollywood recently, don’t feel bad: You weren’t supposed to. But behind the scenes, and occasionally in front of them, a massive operation transformed the property into the eighth Las Vegas casino under Harrah’s Entertainment’s Total Rewards umbrella.

Since its relaunch in 2007, Planet Hollywood has offered players its A-list club, which, like other casino loyalty programs, lets them earn points redeemable for meals, lodging and entertainment with each dollar wagered.

Harrah’s Total Rewards does the same thing on a national scale, letting players bank rewards credits from 35 properties across the United States and Canada. Even before the Planet Hollywood acquisition, Harrah’s has been planning its conversion to the Total Rewards system.

Conversion required more than installing an update patch on a few computers. Technicians had to remove all existing systems, including the core casino management system (which tracks and records play), the lodging management system (which lets the hotel take room reservations) and back-of-the-house systems that track everything from employee hours to ordering and receiving.

via Total Rewards program expands with inclusion of Planet Hollywood | Vegas Seven.

I was able to walk the floor while they were doing the work and talk to many of the people involved in it, and two things struck me: the sheer amount of work involved and the minimal impact it had on customers.

It’s not exactly the Manhattan Project as far as major engineering efforts go, but it’s still pretty impressive.

Since it’s Thursday, I’ve got a new Green Felt Journal for you to read in Vegas Seven magazine. This week, I talk about March Madness on the Strip:

The basketball-mad crowd covers all ages, from cigar-chomping sharp bettors in their 60s to still-in-school rowdies wearing their college colors. It skews young, however, with 20- to 30-somethings dominating in most casinos. The audience in most sports books is about 97 percent male.

The NCAA Tournament, particularly the first weekend, has become an unofficial cross-country college reunion getaway. Although many fans have moved on from the frat house or dorm television lounge and might live thousands of miles apart, they return to Las Vegas in groups of varying sizes each spring to watch the games, drink beer and enjoy what’s become the ultimate guy trip.

The tournament has become one of the biggest draws in town. While it’s impossible to directly assess its total economic impact (no one fills out a survey saying they came to town for the games), it’s acknowledged as a huge draw.

via March Madness offers peek at leaner Vegas vacation | Vegas Seven.

I used the word “crowd” three times in the story, and might have used it more, because gathering information for this story really brought to mind Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds. Not that I’m saying that the guys betting on March Madness are deluded, but it is March “Madness,” and there are big crowds, so I guess my brain filled in the blanks.

And there was something very compelling, but very exhausting, about the atmosphere in the books. I can’t see how anyone has enough energy to do anything but crash for 12 hours, beer and other depressants of choice notwithstanding, after a day of March Madness Vegas action. It must be all the oxygen they pump into the casino.

That last sentence, my friends, is the closest I’m getting to an April Fool’s joke this year.

It’s Thursday, which means another edition of the Green Felt Journal in Vegas Seven magazine. This week, as whether the “little guy” still has a chance on the Strip:P

Last year at around this time, “deconsolidation” was the buzzword along the Strip. MGM Mirage had just announced its sale of Treasure Island to Phil Ruffin, formerly of the New Frontier. Investment bankers and industry analysts announced that, just as the previous 10 years had seen Strip casinos swept into progressively larger corporate empires, the next era would see them splinter into smaller fiefdoms fortified by hedge-fund and private equity investment.A year later, it’s now clear that the pundits couldn’t have been more wrong. Rumors of an MGM Mirage fire sale proved immature. Harrah’s Entertainment has actually added a casino to its portfolio, having taken over the management of Planet Hollywood after acquiring a substantial stake via debt purchases.

via Does the little guy still have a shot on the Strip? | Vegas Seven.

As I promised before, this column also has my first overt Star Trek reference.

Also, only in Vegas would a multi-million dollar company with thousands of employees be considered “the little guy.”

Some other highlights from the issue:
- Nicole Lucht talks to Tony Marnell about the M Resort’s first year
–Mericia Gonzalez looks into the future of Vegas nightclubs
–Jeff Haney, formerly of the Sun, writes about HORSE at Aria. He’s a great poker writer, and hopefully this is the first of a regular series of column.
–and if you didn’t catch it last week, check out Jessica Prois’s talk about statistics with author Jeffery Rosenthal (Struck by Lightning: The Curious World of Probabilities)

Tons of other great reading in there–these are just the ones that have the biggest gambling/Strip connection.

A few weeks ago, I started talking about a tiered pricing model for Strip hotels on the Vegas Gang. I took some time to

On one side, pro-fee advocates argue that they offer convenience. On the other, resort fee opponents maintain that fees are poorly advertised and shock the customer. There may be a way to please both groups of visitors, those who want convenience and those who want low prices. A tiered pricing model, in which customers get to pick one of several levels of service for the same room, might help generate additional revenues and give guests a greater feeling of control over their experiences, which may translate into greater customer satisfaction and stronger bottom lines.

For example, imagine a three-tiered pricing structure for a guest room, with “standard,” “gold,” and “platinum” levels.A guest booking a room at the “standard” rate would receive a room key and not much more. He or she would have to pay extra for virtually every other hotel service; for example, to visit the health club, use the Internet, or make phone calls.

At the “gold” rate, customers would receive everything that came with the standard, plus free wireless Internet, phone calls, bottled water, copies of the local paper, etc.

For guests looking for more, a “platinum” rate could deliver all the benefits of the gold rate, plus several extras — dining credits, a selection of prix fixe menus at select hotel restaurants, tickets to the hotels big show, complimentary spa services, and nightclub admissions.

Guests opting to “go platinum” will value cost-certainty and convenience over spontaneous choice.

Some resorts are already offering something close to platinum-tier pricing. Wynn Las Vegas, for one, offers several packages, including a golf getaway, jetsetter package, romantic retreat, and the Ultimate Wynn Package, that offer guests varying levels of amenities.

We’ve seen the trend towards cost certainty become popular over the past year in Strip restaurants. From all-day, single-price buffet offers to prix fixe gourmet dining, visitors have responded positively to the chance to pay one price for an expected level of service. It stands to reason that an operator to apply this model more broadly to the total guest experience could become a trend-setter.
Companies owning several properties along the Strip are particularly well-poised to offer a variety of dining and entertainment options that will generate true economies of scale and diversity.

Whether it’s called tiered pricing, a vacation package, or something else, this may be an idea that needs to be explored more aggressively as resorts seek to defend their market share in what promises to be a challenging year.

via Las Vegas Business Press :: David G. Schwartz : Tiered room pricing: A modest proposal.

I came in about 250 words over for the article which was shortened for publication, and I included some of the cut material in the quote above where I lay out the proposal.

The industry’s moving in a few different directions right now, and this is one of them. I’m sure that there are a million back-of-the-house reasons not to do this, but coming at this from the consumer’s perspective, it deserves consideration.

Things are looking up in Nevada for the first time in a long time. The state’s casinos won more money from gamblers this November than they did last November. Yet there may be another story that isn’t as positive lurking beneath the numbers. From the LVRJ:

For the first time in 23 months, Nevada gaming revenues increased with casinos statewide collecting $873.2 million in November, a 4.35 percent climb compared to the same month a year ago.On the Strip, gaming revenues were also up for the first time in almost two years. Strip casinos collected $473.8 million, an 8.3 percent jump compared with the figures from November 2008.

In the locals market, November gaming revenues were up 19 percent on the Boulder Strip, almost 21 percent in North Las Vegas and 2.6 percent in the balance of the Clark County.

via Nevada gaming revenues increase for the first time in 23 months – News – ReviewJournal.com.

There are some very interesting patterns here. The big winners statewide were baccarat and pai gow, which increased 136.9% and 26.12% respectively. Slot machines actually did a little worse (down 1.58%), and since they account for the bulk of the state’s gaming, it’s very fortunate that bacc win more than doubled.

Does this mean that we’re out of the woods? Handle, rather than win, is probably a better gauge of consumer interest. Let’s look at the total money played on baccarat in the past two Novembers:

Month Win Hold% Handle
Nov 2008: $39,780,000 10.45% $380,669,856
Nov 2009: $94,237,000 13.54% $695,989,660

So while the casinos got much luckier in November 2009, the total amount played increased by about 83%. Even if they had won at the same rate that they did in November 2008 (10.4%), they still would have made about $73 million from baccarat–a definite step up.

Let’s look at slot handle:

Month Win Hold% Handle
Nov 2008: $558,114,000 5.73% $9,740,209,424
Nov 2009: $549,340,000 6.28% $8,747,452,229

So if you’re a glass-half-full kind of person, you can say that slot play decreased by about a billion dollars from year to year–not the stuff of a major comeback, and certainly nothing to pat yourself on the back about. The hold percentage increased by about a half-point. Could this have something to do with the decline in handle? It’s worth considering. While most of the increase in hold has been driven by players migrating to higher-hold denominations rather than managers tightening up existing machines, the decline in slot machine handle is cause for concern.

It’s paradoxical because players are voting with their feet in two separate directions. On one hand they are playing the high-hold denoms more: statewide win on pennies rose by about 10%, on multi-denom by 4%, and dropped off considerably for everything else, including massive declines in every denom over a dollar (though the $100 drop is complicated by a miniscule ,069% hold percentage). On the other hand, they are playing less, almost exactly 10% less than the year before.

Looking at hold is only part of the picture–looking at handle says a great deal more.

How about the Strip? Here are some highlights from November 2009: Bacc win, up 136%, pai gow, up 58%, and bingo, with total revenues of $212,000, up over 800%.
The lowlights? Craps was off by 32%, due in part to a lower than usual hold percentage; slots were down by about 4%, and sports books won much less in football betting than they did the year before, though the hold (5.23%) was a bit on the low side.

With slot handle down and bacc handle up considerably, the lesson seems to be that the high end is doing better than the low end. From that perspective, it’s good news for City Center and bad news for the lower-tier operators on the Strip and statewide. There appears to be some room for growth in the high-end market that will justify the increase in supply, but it looks like demand for slots continues to weaken.

In a nutshell: good news for some, but I’d keep the champagne on ice, at least until someone figures out how to get slot players to come back en masse.

The November 2009 visitor numbers are positive, with the caveat the the increase in visitation (2.9%) was slightly outdistanced by the increase in room supply (3%). People are coming back to Las Vegas, but they are spending less on their rooms (room rates are down 23% year-to-date) and less at the machines.

If you haven’t read it yet, here’s a link to my latest from the LVBP:

But craps players and conventioneers both, even if they know of the efforts made by designers to craft a green building, are more likely to care about other things: How easy is it to get around this building? Does it make me want to enjoy myself?

via Las Vegas Business Press :: David G. Schwartz : Even amid severe slump for Las Vegas, casino operators can guide destiny.

This dovetails nicely with Chuck’s meditations on the artistry of Aria. The architecture doesn’t mean anything if the resort–and the people in it–can’t consistently get that kind of reaction from visitors.

In essence, I’m saying that they’ve built a lot of hotel rooms on the Strip, and now they have to find ways to keep them full. It’s not going to be easy. And just waiting for better times to return is clearly not going to move things forward.

The point I’m trying to make is that I’ve seen a lot of thinking along the Strip that’s reminiscent of students and gamblers. Here’s what you usually hear when grades come out:
“I got an A in the class.”
“The professor gave me a C.”
In other words, we’re responsible for our successes but not our failures. You don’t have to walk very far through a casino to hear this same mentality at work among gamblers. And these days, you can even hear it upstairs in executive offices.

Back in 2006, I didn’t see any annual reports saying, “Because of rising consumer credit and escalating personal wealth, we’re doing a bang-up business this year.” Instead, it was the bold leadership of the management team that was responsible for all the big rise in shareholder value.

Fast forward a few years, and we hear that “Due to a sagging economy, we’ve had lower than expected earnings.” Well, by now they’re usually expected to be pretty low, but you get the point.

I understand that no manager’s going to come out and say that they’ve done a lousy job of marketing and staffing their property, but it’s important to be more honest internally. Maybe it’s just semantics, but I think what people say reveals a lot about what they’re thinking. In this case, it’s very important for people to accept that the bad economy didn’t do anything to them: the choices they made, whether it was taking on too much debt or not maintaining service standards and the perception of value, put them into the predicament they are in today. They are fully capable of finding a way out of it.

Here’s some breaking news: things don’t look so hot for 2010, at least if you’re in the casino business. From the LVRJ:

The impact the recession had on the casino industry in 2009 has not been completely accounted for, but by all measures the year will go down as the worst on record.

Through October, gaming revenues have declined more than 12 percent both on the Strip and throughout Nevada. Monthly revenue figures statewide have fallen to 2003 levels.

Get ready — 2010 may not be any better according to one casino industry analyst.

Fitch Ratings Service, which follows the high-yield bond markets, believes gaming revenues nationwide will continue to be pressured by the economy. Spending trends remain weak and unemployment will continue to reduce how consumers dole out their discretionary dollars.

via CASINO INDUSTRY: Outlook: Unfavorable – Business – ReviewJournal.com.

This is where the casino executives earn their keep. It’s easy to run a profitable resort when the market’s expanding by five percent each year. When it’s shrinking, it’s another story.

I’m of two minds about the continuing economic gloom. On one hand, we won’t just wish our way out of it. On the other, it seems that this is just a continuation of the long-standing predicting trend of extrapolating the present into the future indefinitely.

This is one of the reasons that trying to predict the future, in any except the most rudimentary ways, is futile. Over the past few weeks, I’ve had several reporters ask me if 2010 will be better than 2009. I have told them all that I just don’t know. Of course, if I said, “Yes, it will get better” or “No, it will get worse,” I’d have about a coin flip’s chance either way. There are simply too many variables to try to forecast what’s going to happen except in the most basic terms.

Casino executives should prepare for a challenging year and focus on delivering a combination of value and favorable experience to their customers. Simply dropping room rates then cutting levels of service will be harmful in the long run. In order to compete with the mushrooming number of gaming options, destination casino resorts will have to offer both good deals and unique experiences. In the past, they’ve usually offered one or the other; now, they have to deliver both.

It’s not going to be easy, but battening down the hatches and waiting for the crisis to pass isn’t going to get the job done. That seems to have been the dominant industry paradigm for about two years now (with a few exceptions), and it’s not a viable long-term option.

It will be important for casinos to concentrate their resources where they can make the most favorable impact on customers, be it on the casino floor or off it.

I’ve been busy today getting the slot hold occasional paper finished up, so running the risk of CityCenter fatigue, here’s an excerpt from my last LVBP column about, you guessed it, CityCenter:

This might be the most novel thing visitors notice about CityCenter, at first. And its hard to believe that its not by design. One thing that sets CityCenter apart from other resorts on the Strip is that because of the density, you will never be far from the street when you’re in the public spaces. The third-floor pool, for example, faces a parking structure on the west. It’s not close enough to smell the exhaust, but it is in the field of vision of poolside loungers. This is a profoundly different sort of vibe than the usual “desert oasis” feel of most Las Vegas pools, where hotel towers or extensive setbacks remove visitors from traffic and, in a sense, reality

via Las Vegas Business Press :: David G. Schwartz : CityCenters pocket parks, traffic circles stand as symbol of Strips evolution.

Further down in the article, you’ll note my reference to plural “pocket parks.” When I wrote this I hadn’t seen the entire complex and was under the impression that there were more than one–I thought I heard someone calling the area outside Bar Vdara “one of the pocket parks,” but I either misheard or that was an error. Even though there’s just one, though, it’s still significant.

Of course, if you were Steve Wynn and you wanted to really rain on CityCenter’s parade (which he probably doesn’t) you could just say, “Twenty years before you unmasked Las Vegas’s first pocket park, I built its first pocket rain forest.” You got to say it in the “I’m Steve Wynn” voice, though.