Panel Discussion: Evaluating Gaming vs Non-Gaming Guest Spending David Schwartz, CDC Gaming Reports · October 11, 2018 at 6:00 pm How should casino executives best capture non-gaming spend? That’s the question that Wednesday’s Global Gaming Expo panel on the subject, moderated by Agilysys Vice President of Professional Services Rob Jacks, sought to answer. Jacks started the session by admitting what most of us in attendance already knew – that non-gaming spend has been “discussed often.” He promised, though, to add a different wrinkle to the generation-old question of how casinos should best handle non-gaming customers, and he and panelists Jason Stump, Vice President of Information Technology for Las Vegas’s Westgate Resort, and Kevin Zenishek, Executive Director of Casino Operations for Spokane’s Northern Quest Resort and Casino, delivered on that promise. The issue, as Jacks and the panelists laid it out, is this: gaming spend is down. That has forced major changes in how casinos operate. “The days of $1.99 breakfasts, when the pit bosses were in charge of everything,” said Jacks, “are gone.” For the past few years, panelists, pundits, and panjandrums have laid the blame for this decline at the foot of younger players. But Jacks sees it differently. “It’s not the millennials’ fault,” he said. Zenishek echoed his sentiments, adding that “fees upon fees,” more than generational shifts, had “guided customers away” from previously popular gaming and non-gaming options. Zenishek was able to share some takeaways from a recent expansion at the Northern Quest, outside Spokane, Washington, which included adding dining options and a Kids Quest daycare/children’s entertainment facility. Thanks to better tracking, the casino is now able to more readily adjust its offerings to capture spend. What once were afterthoughts or loss leaders – entertainment and rooms in particular – are now revenue centers, and they’re now getting the information technology support once only afforded gaming. The transition to a non-gaming dominated casino resort isn’t all bad news. Rooms and restaurants may not have margins as high as slot machines, but they are still generating revenue. The challenge is how to better cater to guests who shop, dine, and see shows but never drop a dime in the casino. For over 30 years, loyalty marketing has been based almost exclusively on gaming spend. Casinos might have detailed data on the theoreticals of penny slot players, but no real knowledge of how convention guests buying hundreds of dollars’ worth of meals and entertainment behaved. There is no denying that gaming is a diminishing part of what customers are spending money on in casinos. Stump shared that the Westgate (formerly the Hilton, and before that Kirk Kerkorian’s International) had whittled its casino down to 600 slot machines and 20 table games, though it boasts the largest sports book in the world. As a 3,000-room convention hotel, the Westgate has plenty of other places for its customers to spend money. The problem is that, until it rolled out a revamped, all-in rewards program earlier this year, the resort had no way of knowing what its guests were spending their money on. The solution, Jacks offered, was to develop loyalty programs that would track the theoretical worth of non-gaming and gaming customers, thereby arriving at the “real worth” of the people who walk through the doors of a casino. Because even though revenues are down for many casinos, foot traffic is the same. “You need to track as many segments as possible,” Zenishek suggested, “and explore opportunities in areas like mobile pay, which can instantly track a customer’s spending.” He pointed out that the gaming industry continues to lag far behind other industries in implementing mobile pay and tracking systems. Stump offered the example of Panera Bread, which does a great job of keeping track of total spend. For that matter, Starbucks and even supermarkets have elaborate loyalty programs. Why are casinos neglecting customers that can easily spend hundreds of dollars in one night? And how do they keep them? “The key is giving benefits to non-gaming spending,” Stump said. Customers spending money on anything at a property need to feel appreciated. If they do, they will return. Technology is now, in many, cases helping casinos better understand their non-gaming customers. Zenishek spoke of using real-time AI to determine marketing offers for non-gaming customers, rivaling the attention once solely lavished on gamblers. Jacks talked about attempts to use facial recognition software to track customers on property, but had a question for the audience. “How many players in your database signed up for a card and never came back?” he asked, pointing out that new breakthroughs in predictive analysis would help woo this “next generation” of fickle guests. In the Q&A, Zenishek spoke convincingly about the need to avoid the temptation of tightening up casino odds to shore up the bottom line. “The guest has a gaming budget,” he said, “and we want to keep it in gaming.” Worse odds and higher fees might shift behavior. Instead of gambling $500 and getting a comped meal, a guest might gamble $100 and spend $400 on everything else. Money is money, but with gaming having a higher margin than other departments, in the long term, Zenishek said, it’s beneficial to drive that money towards the casino floor. So while casinos will likely be investing mightily in tracking and rewarding their non-gaming spenders, they would do well to not neglect their bread and butter: the gamblers.