One trend has been clear in the Las Vegas casino environment:  non-gaming revenue has become a much larger part of the income of a resort.  In 2003, non-gaming revenue surpassed gaming revenue in southern Nevada for the first time since these numbers had been kept.  A significant number of resorts, especially the more opulent, see gaming becoming a smaller percentage of the gross operating revenue.

Traditionally, the casino has been the king of the resort.  The hotel was dependent on the casino to fill a large percentage of its rooms, with tours, wholesalers and groups being the target of hotel marketing staff in an attempt to fill most of the remaining rooms.  Transient guests with no casino history were the exception. In the past 10 years, there has been a marked change in that philosophy.

• The ever-expanding room inventory due to hotel expansion and new construction.
• The diversity of reasons to visit the casino resort. 

The methods of gathering information to assess the value of a casino player are well known.  For the slot machine or video poker player, the exact amount that has been wagered is collected from the electronic gaming machine (EGM) as long as the player has used his or her player card to log into the machine.  The offer of points and comps generally is enough incentive to have a player self identify.  With few exceptions, the casino gives points for the amount of play, not the number of wins or losses by the player.  It is purely a mathematical calculation to determine how much value that player brings to the casino by determining the amount of play multiplied by the standard percentage of hold that the casino gets from that machine.

In the case of table play, the value of the player is a bit more subjective.  While there have been a number of initiatives to implement automated player tracking, the standard method still requires that a pit manager visually determines the average bet per hand of a player and keeps track of the amount of time played.  A table player might play $25 per hand for four hours per day of their stay.  It can then be determined, based on the game, how many hands are played per hour and what the casino hold is on that game.  Blackjack and Baccarat are the lowest card game hold for the house, while games like Caribbean Stud or Let It Ride have much larger percentages for the house.

While the table game value of the guest is less accurate than the EGM value, they both give a fairly accurate indication of how much revenue that guest brings to the resort.  Where the gaming value is greater than the price of a hotel room, the casino will pick up to cost of the room and pay the hotel at an agreed upon rate.  For higher value players, the casino will pick up the cost of higher level rooms like suites, and in many cases, the cost of other services, such as meals, spa, pool cabanas and alcoholic beverages.
 
 If the guest does not meet the minimum amount of play required for a complimentary room in an average of previous stays, the guest might be offered a casino rate, which is generally either a flat amount or a percentage off of the daily prevailing rate for the stay.   For example, if the prevailing rate is $99, a casino rate might be $25 off that rate, or $74 for that night.  In another case, it might be 25 percent off the prevailing rate.

In recent years, another trend has emerged, where many more guests are coming to the resort to partake of the non-gaming experiences.  Hotel resorts have enhanced their pools, spas, restaurants, shopping malls and night clubs in an effort to lure the nongaming customer to the hotel as well as add to the experiences of their casino guests.  While many of these guests still play casually in the casino, they do not expect to play at a level that would earn casino comps, and in some cases, they do not even want to be identified for their casino play. 

While it would seem illogical for a casino-rated player to remain anonymous to the casino for a stay, it is the method of granting comps that causes this to occur.  Casinos typically keep statistics for a player based on what the casino considers a stay.  If a player is known to be worth $750 per day to the casino, that player would rate a high comp level (probably a suite and all meals paid for by the casino).  The comp level might be determined by averaging the theoretical value of the guest on the top three of his or her last four stays.  If a player knows that they are not going to gamble at their normal level, it is possible that they would rather pay for their room and play unidentified rather than risk dropping to a lower comp level due to little or no casino play during that stay.

The most recent objective to determine the value of the guest is to include the guest’s non-gaming spend during the stay.  In most traditional hotels, that is not difficult to do, because most if not all of the charges are made to the guest’s folio.  Point-of-sale systems capture room charges and forward them to the PMS, where the statistics and spend history can be easily determined.  For the hotel/casino, this is not the case.  Far more of the charges are made directly via credit card or paid in cash, making it impossible to capture the non-gaming spend of the average guest.  Since the transaction is discrete, there is no communication back to the PMS concerning the amount of money spent for that particular activity.
 
Another issue concerning the value of the guest has to do with the nature of the transaction.  Where a guest might spend a significant amount of money in a restaurant on the property, that restaurant is probably a concession, paying the hotel only a small portion of the gross revenue.  In the typical transient hotel, by contrast, that restaurant is a revenue center for the hotel.  The same holds true for a spa (which is typically a concession), for stores in the shopping mall of the resort, and shows that are housed in the hotel. While these bring in additional revenue to the hotel, it is not nearly as significant as direct revenue that would be earned by the casino.  Each type of transaction has a different value to the hotel.  A meal charged to room service has a much higher value to the hotel than a meal in one of the concession restaurants.

The most straightforward method for guest identification is to ask the guest to show a room key as part of the transaction settlement.  The key would then be scanned as part of the process, and a memo transaction can then be sent to the PMS. This capability is rare in the current PMS interfaces, although it is an objective of the casino companies to implement this enhancement through the Hotel Technology Next Generation (HTNG) process. 

One of the challenges is to offer the patron a reason to self identify as a hotel guest when paying a bill in one of these outlets.  One approach has been to give the guest a discount on that transaction, but that is an expensive method.  Giving a discount that is enough to encourage a guest to produce a room key is going to cut into the profit of the outlet, with little incentive to the restaurant or store operator.  In many cases, such as shows and spa reservations, these are made by phone well in advance of the guest arrival, and the availability of seats or a particular spa technician and treatment might well dictate when the stay occurs.  In the case of show tickets, these are paid by credit card when the reservation is made, so making the connection with a hotel reservation is problematic.  Another method involves granting points similar to casino points for purchases made throughout the resort.  This may be the best method for capturing the guest information without significant cost.  History has shown that even a small accumulation of points toward future purchases is adequate incentive for self identification.

There are some promising technologies for identifying a guest, such as RFID tags on room keys, or location-based services on the cellular phone that is nearly ubiquitously carried by guests, but the challenges of connecting a particular guest to a specific transaction remains elusive.  Once the data can be captured, determining that transaction’s value to the hotel is straightforward, but our challenge today is to find a way that the guests’ spending patterns can be identified in a nearly transparent way, and to enhance the interfaces between the point-of-sale systems and the PMS or data warehouse to pass that data.

Bill Geoghegan is a consultant in Las Vegas. He can be reached for comment at Bill@LGTConsulting.com.