Prior to COVID-19’s impact on the Gaming industry, loss-leading activities were being eliminated from Gaming enterprises.
The story goes that Steve Wynn, the “godfather of Gaming”, was the perfect Casino Host prior to becoming the Casino juggernaut, which we know him as today. He’d provide private jets, free meals, complimentary stays, and much more to lure top customers to his establishments. He didn’t use data, but instead a gut feeling that these amenities would result in big play from the guest, and big wins for the Casino. This was the old way of thinking.
Today, analysts are constantly evaluating the pros and cons of offering amenities. The introduction of the point system by Harrah’s in the 1990s changed the Vice President of Marketing’s role from a charismatic magnet to a data driven “direct mailer”. Accountants are preparing Proformas for private jets, buffet offers, and bus partnerships on behalf of marketing. The gaming industry has become reliant on data and, in response the Casino Hosts job has changed from creating an unforgettable experience to guiding guests through an array of predetermined amenities, if applicable.
Which way is better?
Data can ensure that a Casino isn’t giving a small player a big comp or perk, but it can also add red tape to luring a big whale. The Casino host’s job is being replaced by an analyst.
Is this necessarily a bad thing? You be the judge.
COVID-19 has fast forwarded the elimination of loss-leaders
Loss-leading amenities were slowly being replaced by cash generating amenities prior to COVID-19, but the pandemic only expedited the process. Prior to the COVID-19 shutdowns, buffets were slowly being replaced by food courts and Entertainment was being evaluated on cash profitability, both of these were unheard of, only 10 years ago.
Now, Casinos are thriving without any loss-leading amenities. Bus partnerships, buffets, complimentary hotel rooms, complimentary show tickets, and even staff, whose job was to increase the guests’ experience have all been eliminated, and without these extra expenses, Casinos are reporting record breaking net income.
When and will loss-leaders come back?
In my opinion, loss leading amenities will be back when competitors begin implementing these items. The Casino industry has forever been a race for the best customers. If there are amenities that lure top customers to competitors, they will be implemented everywhere. It is very much like economics, in that the loss-leading amenities come and go over a period of time, based on what the best customers wants.
We will see whether the buffet will resurface with time.