Nevada Online Poker & Casino News

    Vegas Casinos: Convention Business Rules, But Do Fees Deter Leisure?

    Not all casino markets are the same—and then there’s Las Vegas.

    The king of casino markets is both an anomaly and a leader. Las Vegas is unlike many casino markets because there are multiple identities within the market. Sin City is a leader because it has to be.

    Las Vegas is a unicorn

    Most casino markets have one customer. Not Las Vegas, which has a colorful assortment of demographics it targets and attracts.

    There are casinos around Las Vegas that are geared toward residents. These casinos are as much an all-ages hangout—with bowling alleys and movie theaters—as they are a place for gamblers.

    Downtown Las Vegas casinos, such as The D, cater to a mix of locals and tourists. These are smaller casinos mostly focused on providing a great gaming environment for a variety of guests.

    According to the latest Las Vegas Convention and Visitors Authority‘s visitor profile, about 58 percent of people visiting Las Vegas head downtown to check out the sights, sounds and casinos.

    Then there’s the Las Vegas Strip, which is different than other casino areas in Nevada and around the world. Many visitors think that Las Vegas begins and ends on the Strip. This part of Las Vegas caters mostly to tourists from all over the world. The different mix of guests makes this a unique casino market.

    Hordes of tourists aren’t clamoring to visit every casino market. The Strip casinos have high rollers from Asia and overseas, tourists from all over the US, and regional visitors who are just looking for a few days away from home.

    Each of these groups of visitors has different demands, and the casinos on the Strip try to offer something for everyone.

    Las Vegas Strip is more than gambling

    The Las Vegas Strip hasn’t been only a gambling town for years. Non-gaming revenue has outpaced gaming revenue for more than 30 years.

    The casinos on the Strip have a goal to generate about 30 percent of revenue from gaming and 70 percent from non-gaming. According to the Nevada Gaming Abstract for 2017, gaming revenue was just more than 40 percent last year.

    Casinos everywhere are mainly still places to gamble. Gaming revenue is a bit more important around the country. The increased competition for Las Vegas from casinos around the country may have caused the Strip’s casinos to offer unique experiences.

    Vegas Strip casinos have a mix of restaurants, entertainment, nightclubs, bars, shopping and other amenities that many casinos around the US don’t offer.

    The average Vegas vacation is just more than two days, so guests tend to pack in a lot in a short time. While 74 percent of visitors say they gamble, 77 percent spend two hours or less doing so. That leaves a lot of time to enjoy so much more in Las Vegas. A trip to a casino resort on the Strip hasn’t been only about gambling in a long time.

    Generating profit

    Casino operators on the Las Vegas Strip are mostly public companies. These businesses have to report earnings to shareholders every three months. Profits for the corporations must increase or the value of the company decreases.

    The companies have been implementing fees and cutting down expenses to provide more profits to their shareholders. Raising base prices might scare some people away, but adding fees keeps the advertised prices low, giving the impression of low costs.

    Visitors haven’t cared for the fees, but until recently they’ve dealt with it with murmurs. The fees all add up to unexpected prices, and the casinos might have hit a crescendo with how far they can push some of their customers.

    Leisure versus business travel

    Leisure travelers to Las Vegas have become outspoken about their distaste for all of the fees. That doesn’t seem to worry Strip casino operators who have been preparing for this moment.

    In 2015, MGM Resorts International implemented its Profit Growth Plan.

    This strategy was created to streamline expenses while increasing revenue streams. Caesars Entertainment has followed with a similar but less publicized way to increase profit since the company emerged from bankruptcy.

    In late 2015, MGM Resorts International announced they were closing the Cirque Du Soleil show Zarkana at Aria. New convention and meeting space replaced its theater earlier this year–a more profitable use of that real estate.

    MGM Resorts also opened new meeting space at Park MGM (formerly Monte Carlo) and Luxor. Next year, it will open even more convention space at MGM Grand.

    Expanding convention space isn’t exclusive to MGM Resorts. The Las Vegas Convention Center is expanding while Caesars Entertainment and Wynn Las Vegas are building convention centers.

    Convention and meeting visitors tend to spend more money while in Las Vegas. Anecdotally, business travelers with expense accounts will spend nearly 50 percent more than those without them.

    In theory, casino operators only need two convention and meeting guests to replace the revenue of three leisure travelers.

    Now there’s a battle to make the Strip a place for everyone.

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    Make everyone happy

    The Las Vegas Strip has tourists with one budget and business travelers with another budget. The casino corporations want to maximize revenue from both types of visitors.

    It seems as if they’ve pushed fees as far as they can. However, only one of the two types of customer is really bothered by the extra fees.

    Leisure travelers are always price-conscious because they’re spending their hard-earned money. Meanwhile, business travelers aren’t quite as concerned with the prices as long as they’re in line with other cities that can host their events.

    Casino operators are attacking this discrepancy by offering promotions and discounts to leisure travelers. Earlier this year, casino operators started to offer promotions that repeal fees and offer discounts to loyalty club members.

    Caesars Entertainment alone is seeing a huge spike in hotel room reservations in the fourth quarter. Last month showed a significant increase in gaming revenue for the Vegas Strip, which may or may not be a coincidence.

    Discounting leisure travel while keeping fees in place for business travel may be the best way for Vegas Strip casino operators to maximize revenue for the foreseeable future.

    We should expect to see more promotions from Las Vegas casinos in the new year while casino operators look to increase visitation and generate more revenue.

    Marc Meltzer

    About

    Marc grew up on the mean streets of the South Bronx. He's the rare combination of Yankees and Jets fan which explains his often contrarian point of view. Marc is a freelance writer and social media consultant. Writing about steak, booze, gambling and Las Vegas is a tough job but somebody has to do it.

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