It's Never Apples to Apples

Casino Enterprise Management - March 2006

By: Fred A. Buro

Marketing and Metrics for the Off Brand Casino

You own an off brand casino in a market where you compete with bigger brands. If you haven’t already, you’ll soon find out that early on in your time line, it is simply not equitable to try to compete with the major brands across the board. The trick is to quickly understand your customer metrics, and to establish a profile of the customers who reside in your better performing segments. Those profiles must be analyzed and a model developed that best represents the basis for their affinity to your property. You can forecast growth for those segments by determining how many more of those customers are in the market. That model should serve as the foundation for an aggressive initiative to reach each of those customers and woo them away from the competition.

Analyzing your existing customer base should include; accurately identifying desirable and unprofitable customer segments, learning the specific reasons for customer loyalty and defection, analyzing fluctuations in their frequency or spend, and separating them based upon geographic origin and amenity utilization. This process should flush out segments within which, customers frequent an off brand property over the bigger brands and why. But it will also flush out product deficiencies and performance short falls.

Of course, while all of that is going on, developing an accurate understanding of the dynamics of your fair share against that of the bigger brand properties is imperative to the complete functionality and efficient operation of your property. Meaning; marketing to garner your fair share of any market requires a realistic appreciation for what your fair share should be. This requires an unbiased appraisal of your physical plant, its location, an evaluation of gaming product, food cost and quality, service performance and reinvestment strategies, against each of your competitors; individually and collectively. Almost like handicapping a horse in a race or creating a line on a game; your strengths and weaknesses against the competition.

The major brands are most likely armed with an abundance of cash, superior brand equity, and a newer functional property. They often house a plethora of non-gaming amenities like ultra lounges, clubs, celebrity chef restaurants, luxury retail, convention space, day spas, gyms and the like. And of course; they are staffed with a crack team of marketers marketing to personas that most likely differ from yours. Hence, aggressive misguided marketing can have a disastrous effect on your P&L. Bigger, across the board promotions are usually not the solution to efficiently acquiring more customers – why should they defect if ultimately, your comprehensive product does not appeal to them. They may show up for a promotion but many won’t return.

Play to your strengths

Having identified, and by distinguishing your product to those who find its attributes comparatively appealing, you’ve identified a niche. By marketing directly to that niche and others who fit that profile, the generic product differences between properties matter less, and, those newly acquired customers are more likely to become loyal and give you multiple trips - thereby precipitating growth, profit and the potential achievement of your fair share.

Station Casinos is an excellent example of identifying a niche and competing for it in a market that consists of all the major brands and many other very competitive organizations. Nevada is a $10 billion dollar market. Las Vegas is about $5 billion. Much of that is generated by the major brands in gaming. Station spent years in Las Vegas developing an intimate understanding of their key customer metrics. Their key customers were locals. They locked up their loyalty and aggressively sought more of them.

The big brands were busy gobbling up real-estate on the Las Vegas strip, with a primary focus on domestic and international players, and conventions. They could have, but Station chose not to compete for those segments. Instead, they turned their focus away from the critical mass of the bustling strip to the suburbs of Las Vegas where they cater primarily to one segment; the local customer. And for that segment, they are fierce competitors and handsomely rewarded.

Station’s Green Valley Ranch in Henderson, Nevada is an off strip neighborhood casino and an excellent example of a well executed comprehensive strategy. Personas should drive the way marketing executives develop strategies, not only as a way to funnel customers to and through a web site, but also as a way to efficiently attract and funnel customers to on premise transactions through a collective set of multi channel marketing efforts .

At on time, Station Casinos was a small fish in a big pond. But they found an attractive niche for which they developed a keen understanding. That understanding provided them with the confidence they needed to invest significantly in their business model by adding properties at off strip locations with the appropriate non-gaming amenity set, the appropriate reinvestment strategy in players and player loyalty, and the appropriate investment in staffing and service. The good news for the off brand casino is that, for one reason or another, the major brands don’t appeal to every segment, so there is always opportunity.

So ferret out and analyze key customer metrics against market metrics. They have an important story to tell. They provide meaningful insight about your product and performance, but will also point out where to invest capital and how to build market share without starting a promotional war. Metrics create a theater where great thinking can take place and where triumphant strategies can be developed. Metrics provide the market topography necessary for the off brand casinos to succeed in any market right along side the bigger brands.

Written by: Fred A. Buro, Chief Marketing Officer - Columbia Sussex Corporation, 732-232-6000

River renaissance

Casino Journal March 2006

Written by: Fred A. Buro

Once thought of as a dying market, Laughlin, Nevada just might be a safe bet to hinge growth prospects on

Who's laughing at Laughlin? I think everyone did at one time or another-but no one is laughing now. For many years Laughlin was a mature, moderately growing gaming market, but one where few people aspired to work or visit. The summer heat was said to be so hot it would melt car tires. It must have cooled down quite a bit because seemingly overnight, Laughlin has become a boomtown again-a hot real estate play and an expanding gaming market.

Inflated California real estate is being cashed in and reinvested in the Laughlin renaissance. Residential and retail developments are everywhere. You can find condos along the Colorado River for $400,000 to $700,000, and thousands of new homes and gated communities are planned.

Laughlin, still a value play, may also be feeling the overflow from more costly gaming resort destinations. Lying in the shadows of Las Vegas, Laughlin is just over an hour away.

The 'value' demographic

Laughlin customers are far more than their less than flattering monikers. They may be the savviest of casino customers. For years they have been frequenting the casinos in the exotic desert valley reaping exceptionally high returns for the dollars they spend; unconsciously leveraging the sluggish demand and an abundance of product in the market.

As the weather grows colder in the north, the "snowbird" migration to Laughlin's warm, dry desert climate commences. Retirees? Yes, but not your typical peripatetic sightseer-these folks are on a four month winter vacation. Their mission is cash preservation as they dine, relax and swim-and they gamble a little. They roam the banks of the Colorado ducking in and out of casinos as heckles of $1.22 ham and egg breakfast specials, $5.99 lunch buffets consisting of all you can eat peeled shrimp, snow claws, beer and wine, which include a plethora of meats, cheeses and ethnocentric foods, vie for their patronage. After a robust meal, a dip in their "$19 per night" hotel pool and a short nap; they ready themselves for and evening of value packed entertainment and dinner, and oh yeah...bingo.

As spring arrives, marked by the annual "River Run" event in April, the snowbirds are abruptly displaced by forty thousand or so bikers.

Motorcycle aficionados from everywhere in the country converge upon the tiny resort town, temporarily turning it into a biker's Woodstock. For about five days, the hotels are sold out at premium rates, the restaurants are packed, and the days are filled with concerts, motorcycle rallies and parties. Complementing the music and the dust; the air is energized by the continual thunderous roar of freedom and liberation as thousands of bikers parade up and down the strip showing off their expensive rides. By Monday, the thrill is gone, and so are the bikers.

After the long weekend, Laughlin is so empty and immaculate, the silence is deafening and the sights in contrast to the weekend are surreal. But in a day, Laughlin is ready for the locals and the river enthusiasts to return and carry it through the summer.

Good bet for investment

Laughlin is approximately a $620 million gaming market, with an estimated 5 percent growth in 2005. To create a context against other jurisdictions; Atlantic City is a $5 billion market, and its 2005 growth was 4.4 percent. Missouri is a $1.5 billion market, and its 2005 growth was 4 percent. Illinois is a $1.8 billion market, with 2005 growth at 4 percent. Iowa is a $1.1 billion market, and 2005 growth was 3.9 percent. Although smaller and but seemingly in line with growth in other jurisdictions, it has a comparatively modest tax structure. Laughlin's gaming market will most likely enjoy an incremental lift in gaming revenues resulting from non gaming residential and retail developments as they come on line.

Laughlin is currently home to 10 casinos which are nestled in picturesque settings along the banks of the Colorado River where California, Arizona and Nevada meet: Avi Resort and Casino, Colorado Belle Hotel & Casino, Edgewater Hotel & Casino, Flamingo Laughlin, Golden Nugget Laughlin, Harrah's Laughlin, Pioneer Hotel & Gambling Hall, Ramada Express Hotel & Casino, Riverside Resort Hotel & Casino, and the River Palms Hotel & Casino.

Further validation of Laughlin's looming renaissance may be found on the short list of its newest players. Recent acquisitions by Carl Icahn's American Real Estate Partners, and Tilman Fertitta's Landry's Restaurants, with commitments to invest hundreds of millions in expansion and additional capital improvements for those properties would lead you to believe they have confirmed forecasts of a very bright future for that market.

And so the cycle goes. Having survived throughout the slower years, it looks like Laughlin is finally on a roll. Soon, the $19 room will be gone. More properties will likely turn over as some owners will sell into the forecast of Laughlin's robust future and cash out now. Larger, high-profile brands may exit to focus resources on expanding internationally.

Fred A. Buro is the chief marketing officer for Ft. Mitchell, Ky.-based Columbia Sussex Corp, where he is responsible for the performance of the company's 10 casinos. He has extensive gaming experience and has held top positions at Trump Entertainment Resorts and Penn National Gaming.