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How will casinos change to cater to the millennial customer?

How will casinos change to cater to the millennial customer?

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March 01, 2017
Casino Technology
Heather Monteiro, PhD

©2017 Hospitality Upgrade
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This question makes the assumption that we are in the gambling business. Are we?

It is essential that we accurately define our business before we decide how to respond to the seemingly changing needs of millennial guests. How we define our business thereby informs how we satisfy the changing interests of our new generation of customers while simultaneously serving the more loyal and profitable older generation of casino guests, those above 50 years old. An important factor to consider in developing the response to the millennial guest is to evaluate their size and profitability as casino guests. Currently, millennials are a small percentage of overall casino patrons (as low as 7 percent), and the average gaming spend is quite low per trip (an average of $100 per trip in Las Vegas). Keeping in mind the relative size and revenue generated by this generation, it calls into question the return on investment which may be realized by altering the gaming environment to better fit the millennials’ preferences. However, to really answer this question, we have to think more strategically.

Theodore Leavitt’s groundbreaking article “Marketing Myopia,” originally published in 1960, provides explanation, guidance and forewarnings in determining precisely what business we are in. The lessons of Leavitt continue to be increasingly relevant today, so much so that in 2004, Harvard Business Review republished “Marketing Myopia” in its “Best of HBR” issue. The article’s principles can lead to a sustainable business even when industry growth slows or diminishes. Revisiting Leavitt’s ideas is just as valuable in 2017 as it ever has been.

Answering the what-business-are-we-in-question is the first step in developing our reaction to the interests of the millennial guest. If we define our business too narrowly, our growth and competitive position will diminish. However, if we back away to get a look at the forest, we begin to see our business’ true place in the competitive landscape, and the industry, and whether it's a fit with customer’s needs and desires. According to Leavitt, our true purpose as any business is to give customers what they want and to be receptive and focused on their input toward that goal.
Are We in the Gambling Business?
If we define ourselves as being in the business of gambling, our business objectives would be to increase awareness, interest and participation in gambling by all individuals, including those in the millennial generation. An internet search returns several articles about the millennial casino and recommendations on how to create it. The features espoused in these articles include an increase in social spaces, gaming machines which allow social interaction, particularly those with real or perceived competition, machines which allow some level of free play, and an increase in skill-based games such as table games or skill-based electronic games once approved by regulatory bodies. To serve the millennial customer, defining our business as gambling would require execution of the rather myopic idea that tweaking the current casino floor is enough. If we simply alter the appearance of the slot machines, have different themes, add cinema-quality graphics, use celebrities or pop-culture references on the machines, or employ virtual reality or e-sports gaming areas, that would be good enough under this paradigm. But are we really looking for good enough?

Are We in the Entertainment Business?
If we define ourselves as being in the business of entertaining, the business objectives and goals we use to reach those objectives take on a very different hue. While gaming spend has been decreasing over several years, other spending on entertainment, hotel, food and beverage and retail shopping in resorts has increased. If our job is to give the customer what they want, they are revealing their preference to us quite clearly. Closely focusing on the customer preferences and responding to those preferences is a much more complex task requiring abundant market and consumer research, the ability to analyze that research and provide insight and actionable recommendations, and the capability to enact those recommendations. Dressing up the gaming floor is like child’s play by comparison. What does it mean for the future of casinos if the up-and-coming generation of millennials is entirely disinterested? If the business of casinos and integrated resorts defines itself by gambling, it means the downfall and decline of the industry. However, if the industry defines itself more broadly, and is focused on satisfying the needs and interests of its target customer, growth and sustainability is more likely to result.

Defining a business as gambling is the easy answer, of course. If all we have to do is buy or lease different machines, add sofas with cocktail servers to the gaming floor and increase table games while reducing slots, that’s simple. But redefining the business as one that is hyper-focused on what the customer wants when they enter an integrated resort or casino is much more complex, requires buy-in from all parts of the organization, particularly upper management, and becomes an ongoing, dynamic, intensely important discussion. While the latter is much more challenging, requiring creative and critical thinking, this type of customer-oriented focus can sustain growth after the easy opportunities have been spent. With the consistent focus on finding opportunities to better satisfy what the guests want, within our capabilities, the output of successful innovations can be substantial.

To sustainably succeed, the industry must be defined more broadly. Look at the areas where dollars are accumulating in the integrated resorts, and follow that. Your customers are telling you what business you are in. If we track their dollars, what we have is what they actually did. We only have to listen, and most importantly, act.

Heather Monteiro, PhD, is a visiting lecturer with the Lee College of business at UNLV. She can be reached at heather.monteiro@unlv.edu.

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