Is the Las Vegas Strip finally showing cracks in their pricing policy? By Paul Sculpher, Special to CDC Gaming Reports May 22, 2019 at 2:45 am The cost of a trip to Las Vegas has been increasing almost exponentially for many years, with both highly visible changes (new resort fees, new parking charges) and more subtle increments (lower slot payout percentages, higher drink prices) contributing to the savage attack on the Strip visitor’s wallet. It’s also fair to say that it would be difficult to point to areas where service levels have increased apace. While the resort experience is still a very high-quality one, overall, the queues for check in and general impossibility to find a waitress on most megaresort gaming floors make clear that cost cutting is at the heart of most business plans. Anecdotal comment in online forums and social media suggest that service-level teams are having to do more with less – not exactly encouraging for the imminent Las Vegas visitor. Only last month, MGM announced 254 jobs were to be cut, largely at management level and above, and there’s another round coming soon, including staff-level roles. This salami slicing of dollar value has been going on for a while – I wrote a piece about it more than three years ago – https://www.gamblinginsider.com/in-depth/1928/las-vegas-risks-pricing-itself-out-of-the-market – and things have unquestionably become noticeably more expensive since then. I’ve spent at least 30 days in Vegas since that article was written, and one incident encapsulates perfectly how rapacious the processing of customer money has become. Last year I was playing slots at a major top-end Strip property. After a half hour fruitlessly waiting for a floor valet to take a drinks order, we got fed up and headed for the sports bar. Sitting down to play video poker, it came as no surprise that drinks weren’t comped. What did come as a shock was that the bill for two beers was $28! From the casino executive’s point of view, it can be tough to make major changes. If the culture has been about cost control for years, with some strategic innovation mixed in (for example, the growth of the lucrative nightclub culture), then in a short-termist world, who wants to be the person who stands up and says “nope, we’ll forego some easy income because it’ll be good for us in the longer term”? People get fired for reduced short-term profits. Turkeys generally aren’t in the habit of voting for Christmas (or Thanksgiving). Given all that, the recent announcement that Wynn are cutting mandatory self-parking charges was a very interesting one. This may be a simple marketing exercise, but it also may be the beginning of the backlash that many believe is long overdue. Summary statistics are of course available for Nevada and Las Vegas visitation, but naturally operators have access to numbers in real time, and if this is the beginning of a readjustment to falling visitor numbers, perhaps there’ll be more to follow. There is an interesting parallel in the UK, although in retail banking. For decades now, if you banked with one of the big names, your high street experience has been getting steadily less and less personal, and worse and worse overall. You want to speak with someone? Make an appointment. You want something that isn’t absolutely standard? Nah, too much trouble. You want your mum’s local branch to be available, since she’s not so internet savvy? Tough luck, we’re closing it since it costs too much. In the UK, the rise of Metro Bank has been fascinating. They’re taken a completely different approach from the prevailing one, with the view that the customer does in fact care about service. They’re open evenings and weekends, and they have people on staff who can make decisions. I went in recently to open a new business banking account, and the reception team member had to repeat herself – my mind simply couldn’t process that there’d be someone onsite who could handle that process for me in ten minutes, no need to book for next week. The Metro Bank route may have challenges, but having all your competitors go the cost-slicing route, eroding service and relying on automation at the expense of personal service wherever possible, might be opening a gap for you to exploit. The casino world is an even more service-orientated business than banking. Yes, there’s a huge amount of brand loyalty in Las Vegas, but you only need to look through any related Facebook group to see the level of dissatisfaction with being treated like a walking wallet by your favourite casino. Is there an opportunity for an operator to move to the other end of the pendulum swing and offer an experience that people will switch operators to sample? Enhanced service costs money – a lot of money in the labour-intensive world of casinos. But bank staff also aren’t cheap, and the above example suggests that people may indeed care enough to switch to get the experience they want. The key for casinos is REVPAR – revenue per available room. It’s no use increasing your levels of service if the customers don’t spend a suitable amount, either on the room itself or, if we’re trying to avoid horrific pricing policies on food and beverage (F&B) and other ancillaries, on gaming. It’s more challenging when you add in the gaming element. Exactly how you manage REVPAR typically depends on the type of customer. Looking at the very top tier in Vegas – Cosmopolitan, for example, or Wynn – the opulence of the resort is part of the key to attracting the bigger-spending players. However, at the top of the tree, business development is ruled by loss rebate offers, private flights, and the reputation and cachet of the casino itself. It’s the medium spender who’s been shut out by Las Vegas of late. While the average gambling spend for Vegas is around $500 per person per trip, the most disillusioned element are perhaps the spenders in the $3,000 – $25,000 range. Their comps have been whittled away, their bankroll gets eaten at a frightening rate by ancillary costs, and they just aren’t getting treated the way they expect their spend would merit. This group is the one that may most matter to the savvy operator. We’ll see, over the next couple of years, if anyone wants to make significant changes to seriously up their proportion of this cohort by treating them more like a human being and less like an ADT (Average Daily Theoretical) statistic. By the way, kudos to the Cosmopolitan for getting the message of sympathy out there to the unfortunate people made redundant in the recent MGM layoff round, and that they have jobs available. Obviously there’ll be some self interest – good people are hard to find – but it looks like they’ve recognized that it can happen to all of us, and just putting the message out there that someone empathises may help in some small way.