The Las Vegas Strip has undergone a major transition over the past decade-plus. Once reliant on gaming revenue, non-gaming events like concerts are now the Strip’s biggest revenue source.
A UNLV-sponsored educational seminar on April 24th will delve into the return on investment for non-gaming attractions at casino properties that have, historically, primarily focused on gaming.
Increased gaming competition has meant casinos must do more to differentiate themselves from nearby casinos, according to Stowe Shoemaker, dean of the UNLV William F. Harrah College of Hospitality, which is hosting the event. The answer has been to develop non-gaming attractions that add revenue to the bottom line and excitement to the gaming experience, he said. As to what makes the most sense, it often depends on the casino’s location, the regional preferences, and the offerings of the competitors.
Shoemaker will moderate a panel that features Tom Soukup, senior vice president and chief systems product officer with Konami Gaming; Oliver Lovat, founder and managing director with Denstone REA; and Elena Shampaner, vice president of strategic initiatives with Pinnacle Entertainment. Mark Birtha, president of Hard Rock Rocksino Northfield Park, will video conference in from Ohio.
“At this session, we’ll discuss what non-gaming amenities work best, the initial costs, and how long (until) the return on investment kicks in,” Shoemaker said. “We’ll find out how to interpret and use data to get the best ROI out of your hotel rooms and non-gaming amenities.”
The 2018 educational series is a cooperative effort between Applied Management Strategies, UNLV, and Casino Connection Intl., the publishers of Global Gaming Business magazine.
Roy Student, founder and president of Applied Management Strategies and a longtime gaming and hospitality executive, said the reason for the program is to get the point across to the industry that the transition is happening and that eventually the industry will be fundamentally non-gaming, with slots and tables as the amenities.
“We’re not in the gaming industry anymore,” Student said. “We’re in the hospitality and entertainment industry. It’s happening because the demographics are changing with millennials… Culture is changing. Their form of entertainment is not go to a craps table but to have a gourmet meal, see a show, shop, lay at the pool or go to a club.”
Native American tribes have realized what’s happening and are starting to bring more amenities into their facilities because that the new revenue source, Student said. That trend is also happening in Macau and Singapore, where they’ve begun adding major amenities as well.
“They’re bringing in new restaurants, and they’re bringing in entertainment, shows and martial arts events,” Student said of Native America casinos. “Now they’re looking at esports as an amenity, and they’re starting to build more hotel rooms. (Before) some had hotels, and some didn’t.” Regional casinos, too, are putting in more restaurants and retail outlets, Student said.
The tribal and regional casinos are following the Strip trend, where two-thirds of revenue is now non-gaming, Student said. That transformation has gone to another level with the opening of T-Mobile Arena and the Park Las Vegas, a dining and entertainment district of MGM Resorts International. The NHL’s surprisingly competitive Vegas Golden Knights have added additional excitement, and when the Raiders relocate in 2020, that will take it to another level, he said.
“I don’t think any of us really know where it is going to go,” Student said. “If you (said to) any of us 15 years ago that non-gaming (revenue) would be 70 percent (on the Strip), we would have said you were crazy. The vendors and operators smart enough to recognize it and gear their organizations for this new transition are the ones that are going to be most successful.”
Global Gaming Business magazine publisher Roger Gros said while non-gaming revenue has become a crucial part of Las Vegas properties, casinos across the country realize that with competition, they have to “do things to set themselves apart.”
Gros said it’s amazing seeing the transformation in Southern California, where Native American tribes are now building convention space with their hotels to help expand revenue during the weekdays when it’s slow on the gaming floor.
One of the speakers who will address that, Gros said, is Bob Boughner, a principal with Global Market Advisors and a board member of Boyd Gaming.
In a session entitled, “Cash Registers Ring: The Diverse Elements of Non-Gaming Attractions,” the focus will be on how the days of using the hotel, food and beverage and spas as loss leaders are gone. With gaming revenue flat, the requirement for every casino executive is to find other sources of revenue, Gros said.
Boughner will break down the various elements of non-gaming, discuss revenue possibilities and explain how those attractions can contribute to the bottom line. He’ll discuss efficiencies and multi-use spaces; entertainment options; MICE activity, and food-and-beverage opportunities.
In 1998, Mr. Boughner was appointed chief executive officer of Borgata, where he directed the design, development and operations of the $1.6 billion integrated resort in Atlantic City.
“They had to separate themselves from all of the existing Atlantic City properties, and they did that by creating great food and beverage experiences and tremendous entertainment,” Gros said. “They were the first to debut top nightclubs in the city.”
Soukup will talk about Konami’s rating system, in which players are tracked for spending money on non-gaming expenses. Lovat has done studies on millennials, and will talk about how to use non-gaming to attract new customers.
“The speakers we have will be able to present our attendees things they can take to their jobs the next day and (help) change the way they do business,” Gros said.
Non-gaming revenue is now about 66% of the total on the Strip; it crossed the 50 percent mark in 1998, according to Brent Pirosch, director of gaming consulting for CBRE. If you exclude high-end baccarat play, the non-gaming total is more than 70 percent, but even those numbers are understated by lease income from restaurants and large malls on the Strip, he said.
Downtown non-gaming revenue is about 50 percent of the total, but it was less than 40 percent in 2000, and only 32.4 percent in 1990.
The Boulder Strip runs about 30.7 percent non-gaming, he said. Clark County, which includes Mesquite, North Las Vegas, and everything else that isn’t downtown, Laughlin, the Strip or the Boulder Strip, is 35.6 percent non-gaming.
Nevada is currently one of the few jurisdictions to report non-gaming revenue. Of others that do so, Atlantic City currently runs about 28 percent non-gaming revenue, and Colorado casinos run about 16.3 percent non-gaming.
“I suspect that is fairly representative of most other jurisdictions around the country,” Pirosch said. “If you look at someone like Penn National Gaming, 80 percent of their revenue is from gaming revenue.”
The cost for the event is $199, or $79 for the webcast. The session runs from 1 p.m. until 5:30 p.m. at the UNLV Stan Fulton Building/International Gaming Institute, 4505 South Maryland Parkway.
For more information, go to https://conferences.regfox.com/unlv-gaming-hospitality-education-series-2018.
