In 2011 , 32 percent of Las Vegas customers always or mostly stayed at a particular resort . This was 57 percent in 2021 . Consequentially , opening a new resort in Las Vegas without a database of customers has been more challenging in the past decade than any time in history , with a greater importance placed on strategy and positioning .
and when it came to gaming customers , the resorts actively competed against each other — to the benefit of the customer and not the company .
At Caesars , the centralized model found an increased share of both customer wallet and loyalty within the portfolio via targeted marketing and crosspromotion .
After Lanni ’ s retirement in 2008 , his successor , Jim Murren , had some big decisions to make . He ended the internal competition model , instead emulating Caesars ’ centralized strategy , launching the “ One Company , One Culture ” initiative .
After stabilizing the company following the financial crisis , the benefits from centralization were evident — reduced property-level costs , and by integrating their players clubs across the portfolio to form Mlife ( now MGM Rewards ) they could compete with Total Rewards . The company also captured greater customer data and could implement a corporate-wide investment strategy focusing on ROI .
Also , by reducing internal competition , MGM could strategically segment their portfolio , managing the entire business as one , rather than separate resorts .
Las Vegas casino resorts shifted strategic emphasis from growth via acquisition to focusing on driving revenues from customer loyalty , with stunning outcomes . In 2011 , 32 percent of Las Vegas customers always or mostly stayed at a particular resort . This was 57 percent in 2021 . Consequentially , opening a new resort in Las Vegas without a database of customers has been more challenging in the past decade than any time in history , with a greater importance placed on strategy and positioning .
By the 2020s , many of those that formulated the management cultures and strategies had departed the industry . Lanni died in 2011 , aged just 68 . Wynn left the industry in 2018 . Many of those that were part of the Harrah ’ s journey have retired , save Phil Satre , who serves as chairman of Wynn Resorts .
ALL CHANGE
Today ’ s gaming companies are stacked with some of the brightest and most rounded professionals in the country . Rather than focusing on the ongoing operational challenges , when Covid struck the industry , management could turn their attention to the strategic issues for a post-Covid recovery .
The first was advancing technology , including turning online , seeking to take advantage of the newly deregulated market of online sports betting and casino . Significant moves were made in the M & A space to buy technology and market share , and launch brands . There are several advocates for the omnichannel strategy , with multiple touchpoints for customers , making the case that deepening the relationship will show benefits .
The second was realizing that Las Vegas ’ value had become more than the casino . Resorts needed to optimize revenues , eliminate under-performing elements , and price according to market demand .
The introduction of sports , entertainment and major events has changed the nature of the business model . In 2023 , despite gaming revenues being over $ 8.3 billion , a record level for the Strip , this amounted to 35 percent of the total .
Guest-room revenue totaled $ 6.9 billion , which was 29 percent of the total . The 2023 revenue generated from selling hotel rooms on the Strip was greater than gaming revenues in every year prior to 2022 , and some forecast that room revenues will surpass casino by the close of the decade , something unthinkable a generation earlier .
LESSONS TODAY
The AGA reported that casino gaming revenues grossed $ 49.4 billion in 2023 . We could assume the same again for non-gaming revenues . Casino stocks are held by pension funds , debt by international banks , and real estate owned by REITS . If there is an American business success story , it is that of the gaming industry .
We can chart this story in parallel with the evolution of postwar management theory and the successes seen by those that adopted that change .
With early managers and owners overseeing the operations , using hierarchical , top-down processes , the business builders could monitor data and performance metrics . As the industry expanded to Atlantic City , the introduction of corporate systems from outside the casino space allowed for greater planning and the influx of the first professional generation of managers from beyond the casino .
Watching this centralized model emerge in Atlantic City was the next generation , who prized operational excellence , customer intimacy , and within their segments , product leadership , which allowed for expansion and the ability to grow their casinos into corporations .
Concurrently , Wynn ’ s model of organizational culture and employee empowerment was innovative , particularly in the development of new properties . Wynn ’ s purpose was to encourage engagement , engendering emotional loyalty .
Howard Hughes may have been one of the earliest portfolio owners , but Terry Lanni was the man that had the vision for corporate gaming . At Caesars World , he set the template for national expansion , providing a management and strategic outline . He did it again at MGM , except on a larger scale , building the business from the inside out . Starting with a strong internal core , MGM was able to absorb and grow through acquisition .
Satre spearheaded the rapid expansion in gaming , from running two casinos in one state to building a national platform serving tens of millions of customers . He embraced tangential thinking , pulled from outside and applied those lessons with precision , structuring the perceived intangibility of loyalty , and using customers ’ own decisions to drive value and change the business model .
Having tried several management models for corporate ownership in a competitive environment , Murren and Loveman resolved the dilemma , proving the effectiveness of the centralized method , promoting segmentation within , and allowing for planned differentiation on a property level , which enabled the diversity of the modern Las Vegas offer .
Reflecting on the evolution of casinos over the past 75 years , we acknowledge the strategies applied and management employed from the top down and bottom up , shaping the business model from inside out and outside in , and the innovative implementation of technology to allow better decision-making , has both enhanced the bottom line and delivered a greater customer experience .
There is little doubt that modern gaming management is a beacon across the world . Other industries look at Las Vegas not just for hotel development and operations , but for strategy and management . We have gone from adopting management and strategic theory to shaping it .
Oliver Lovat is the CEO of The Denstone Group , which offers strategic consultancy in casino and hospitality development . His research topics are Las Vegas customer behavior and the evolution of competitive strategy within casino resorts . For the unabridged version of this article , visit GGBMagazine . com .
30 Global Gaming Business OCTOBER 2024