Las Vegas casinos looking to bring experiences to guests beyond gaming

August 26, 2023 3:24 PM

Las Vegas casinos looking to bring experiences to guests beyond gaming

Photo: Shutterstock
  • Buck Wargo, CDC Gaming Reports
August 26, 2023 3:24 PM
  • Buck Wargo, CDC Gaming Reports
  • Nevada
  • Commercial Casinos

Las Vegas casinos and other gathering places continue to look for ways to attract tourists and visitors to their property that go beyond gaming. That trend isn’t about to change anytime soon in a marketplace where gaming made up to 60% of the revenue in 1990, the first full year that the Mirage was the Strip’s first megaresort.

By 1998, gaming and non-gaming revenues were a 50-50 mix, as more expensive rooms, high-end restaurants, retail, resort-style pools, nightclubs with prominent DJs, Cirque du Soleil, and upscale spas deviated from the notion that Las Vegas was a place of inexpensive buffets and coffee shops. Today, about two-thirds of casino revenue is non-gaming and properties continue to double down.

Even off-Strip casinos understand the importance of bringing in customers for reasons other than gambling. That focus on experiences is expected to be crucial in attracting the next generation of visitors to Las Vegas.

Oliver Lovat, CEO of the Denstone Group, said Las Vegas casinos are starting to focus on what people are doing in other places around the world and importing those concepts. “The most successful casinos in the history of Las Vegas have been those that have offered experiences to the customers,” Lovat said. “The next generation of customers, particularly those under 40, are seeking these things in their home town, whether it’s London, New York, or Los Angeles.”

In July, a concept borrowed from London and introduced in New York City in 2022 was announced for Mandalay Bay. Swingers, a mini-golf club experience for adults, will occupy 40,000 square feet when it opens in 2024 and feature cocktails, restaurants, and street food.

“I think 2022 was the first time that the majority of customers who came to Las Vegas were under 40,” Lovat said. “The casinos are asking, what are the needs of our customers and how can we give it to them?”

Five years ago on a panel discussion in London with the CEO of Swingers, Lovat talked about the fit of what they were doing in the UK and bringing it to Las Vegas. The Strat on the north end of the Strip will soon open Atomic Range, another golf experience that’s built on the wildly successful Top Golf venue already in place at MGM Grand

“It’s taken time for Las Vegas to buy into that and bring in things like Swingers. There are a whole host of successful experiences in other cities that are coming to Las Vegas,” Lovat said. “Las Vegas has to do more of these known experiences to be successful in the future.”

Though Lovat declined to name them, since he serves as a consultant involved in bringing some of them to Las Vegas, he admitted that the problem is a lack of space.

“For a casino to bring in these types of experiences, something else has to go,” Lovat said. “Where do you find 25,000 square feet at the Bellagio? It doesn’t exist. Properties could take out restaurants and underperforming tenants or reposition convention space. But everybody is performing so well. Las Vegas needs more space.”

Casinos are bringing more entertainment to the Strip. MGM Resorts partnered with AEG to build T-Mobile, that’s home to Stanley Cup champion Vegas Golden Knights and musical acts who needed a 20,000-seat arena. The Sphere at the Venetian that will open in September started as a partnership with the Las Vegas Sands Corp., former owner of the Venetian and Palazzo. Bally’s Corporation, operator of the Tropicana, has struck a deal with the Oakland A’s to build a 33,000-seat stadium that will the demolish the hotel-casino and serve as a destination for tourists and locals.

“There’s a bifurcation between the high-end gaming properties and everything else,” Lovat said. “High-end gaming is profitable at such places as Aria, Bellagio, Cosmopolitan, Caesars Palace, Wynn, and the Venetian. But everything else in town has to be entertainment driven to get people in. One of the things we’ll see in the next three to five years is a slew of experiential entertainment coming to town — immersive theater and things like that.”

This concept has already caught the attention of the rest of the Las Vegas casino and commercial brokerage and development community. It was a focus of a panel discussion of Naiop Southern Nevada, the development organization.

Frank Volk, an executive vice president and broker at CBRE, said the Strip has long been an experiential economy with gaming, nightlife, and food and beverage, but those experiences are more refined than they were 20 years ago.

“The person who coined the term ‘competitive socializing’ has taken that activity and enhanced it by technology and paired it with hospitality food and beverage to create an extended stay where you spend more money,” Volk said. “Anything you can think you can do that’s already somewhere in the world, you will see some enter on the Strip in a 20,000- or 30,000-square-foot box.”

A prime example is AREA15, the experiential retail and entertainment complex that’s just off the Strip and has helped show Las Vegas casinos how the concept is working. It attracts 75% to 80% of its guests with such attractions as Meow Wolf, an immersive art experience.

“People just don’t sit around and drink anymore,” said Michael Casper, vice president of development for AREA15. “They want to do something while they’re consuming food and beverages. There’s ax throwing and darts and golf while drinking.”

Randy Aguilar, currently the director of leasing at Station Casinos, was involved in bringing the Titanic exhibit to the Rio in 1999 and saw immediately how people were drawn to the property by an experience.

“Everything in a casino is an experience,” Aguilar said. “If you go to a restaurant, bar, movie, or bowling alley, that’s an experience. What AREA15 has done is genius for this market and opened up a whole new way of thinking. You talk about New York, L.A., or Miami, but nobody does anything better than Las Vegas.”

Aguilar said it’s important not to build “slot boxes.” While there’s a lot of money in gaming, there’s more in other concepts.

“The most important thing for us is time,” Aguilar said. “I always thought that if you get someone to come in and spend $1,000, they’re good to go, but you may not see that guy again. As we look at new things, we’re looking for something that will keep you in our property for five or six hours. Even if you don’t gamble, we’ll still get your money somehow. Restaurants are on the perimeter and oftentimes you don’t even have to go into the casino. On the Strip where I came from, that was unheard of in the old days. You had to go inside. We’ve figured out a better way to get your dollar, but we need your time. That’s why these concepts are so important to the future of gaming in this country.”

The Strip should benefit from AREA15’s plans to bring even more tourists to Las Vegas. It’s opening a year-round horror park operated by Universal Studios as part of a 20-acre expansion that will add 300,000 square feet of immersive retail, of which Universal will claim 100,000.

“Probably three other media companies are entering the market in the next 24 months,” Volk said of the Universal deal. “The whole idea behind Universal is they understood Meow Wolf numbers. When you see a box that’s tens of millions of dollars, there’s a business case for them. It was a market where the data pointed to them to do something.”

Casper said Las Vegas is unique and can be compared only to Orlando when it comes to tourism and AREA15 has been able to trade off 40 million-plus tourists.

Casper said “immersive” is the word that keeps getting used — the blend of technology, staff, and activities to give a one-to-one experience, so that a person feels like an individual.

“People are looking for a story to tell,” Casper said. “That’s why they come to Vegas. They want to go home and have stories they can tell five times at different parties. That’s what we try to deliver to the guests.”

Aguilar said they’re looking at what’s next for Station Casinos and as a gaming company they’re only as good as the next experience they offer. The Strip is an inspiration of what’s possible for neighborhood casinos.

“We have the ability to do things the Strip can’t do, because it’s landlocked. We have all this land and can do all these great things that can have a huge return on investment. You’ll seeing at Durango some things that haven’t been done in the suburbs. We can take what the customer is looking for from an experience standpoint to our casino and we will get their time.”

The future will be vastly different from today, said Volk, who added he’s already doing deals for 2025 and “they’ll be wider and more diverse with companies operating at a higher level and making bigger bets in Las Vegas.”

Aguilar looks at AREA15 and wonders why that can’t be emulated.

“What you’ll see 10 to 15 years from now? Forget about it. This town will blow the world out, because we do the best.”