Looking at 2010

Here’s some breaking news: things don’t look so hot for 2010, at least if you’re in the casino business. From the LVRJ:

The impact the recession had on the casino industry in 2009 has not been completely accounted for, but by all measures the year will go down as the worst on record.

Through October, gaming revenues have declined more than 12 percent both on the Strip and throughout Nevada. Monthly revenue figures statewide have fallen to 2003 levels.

Get ready — 2010 may not be any better according to one casino industry analyst.

Fitch Ratings Service, which follows the high-yield bond markets, believes gaming revenues nationwide will continue to be pressured by the economy. Spending trends remain weak and unemployment will continue to reduce how consumers dole out their discretionary dollars.

via CASINO INDUSTRY: Outlook: Unfavorable – Business – ReviewJournal.com.

This is where the casino executives earn their keep. It’s easy to run a profitable resort when the market’s expanding by five percent each year. When it’s shrinking, it’s another story.

I’m of two minds about the continuing economic gloom. On one hand, we won’t just wish our way out of it. On the other, it seems that this is just a continuation of the long-standing predicting trend of extrapolating the present into the future indefinitely.

This is one of the reasons that trying to predict the future, in any except the most rudimentary ways, is futile. Over the past few weeks, I’ve had several reporters ask me if 2010 will be better than 2009. I have told them all that I just don’t know. Of course, if I said, “Yes, it will get better” or “No, it will get worse,” I’d have about a coin flip’s chance either way. There are simply too many variables to try to forecast what’s going to happen except in the most basic terms.

Casino executives should prepare for a challenging year and focus on delivering a combination of value and favorable experience to their customers. Simply dropping room rates then cutting levels of service will be harmful in the long run. In order to compete with the mushrooming number of gaming options, destination casino resorts will have to offer both good deals and unique experiences. In the past, they’ve usually offered one or the other; now, they have to deliver both.

It’s not going to be easy, but battening down the hatches and waiting for the crisis to pass isn’t going to get the job done. That seems to have been the dominant industry paradigm for about two years now (with a few exceptions), and it’s not a viable long-term option.

It will be important for casinos to concentrate their resources where they can make the most favorable impact on customers, be it on the casino floor or off it.

11 Responses to 'Looking at 2010'

  1. EW1951 says:

    I’ve been bothered for the last two years by how the casino industry has decided to weather this economic crisis.

    DGS wrote:
    “battening down the hatches and waiting for the crisis to pass isn’t going to get the job done…it’s not a viable long-term option.”

    This economic ‘hatch battening’ is exactly what almost every industry and person in America has been doing. Acting like a bunch of scared, timid girls.

    Everyone heard there was a ‘monster outside’ and their only action has been to turn-off their lights, lock their doors and wait for the monster to eventually go away.

    I’ve seen enough science-fiction and monster movies (from King Kong, to Godzilla, the Blob, Cape Fear & Straw Dogs) to realize that the scenario ALWAYS calls for at least one or more people to rise up and take OFFENSIVE ACTION.

    Yet…the entire gaming industry seems to be sitting on the sidelines waiting for 1999 to magically re-appear. This national (and local) malaise is really starting to scare me. I’ve NEVER seen America behaving so weakly in all my 58 years. NEVER.

    Historically….whenever Americans have failed to act, the problems only grew worse. But events like Pearl Harbor forced people to react defiantly. Back then, Americans didn’t just WAIT for the problem to PASS. They went out and took the bull by the horns.

    The required action has to be well-thought out though. We can’t just plunge into inappropriate action – like GW Bush did after 911 when he decided to waste a trillion dollars trying to batten down the WRONG hatches.

    The required action (during crisis) needs to be well-thought and applied in strategic ways. And it needs to be put into action quickly. Just like during ANY time of disaster.

    For two years now, Americans have been avoiding our economic problem completely and simply playing defense. We aren’t being properly offensive at all. And whatever small actions we have been taking (as a society) are happening in a snail’s-pace. Quite honestly, I’d be hard-pressed to list ten ways we are attempting to overcome this economic crisis. All we seem to know to do…is to keep our wallets closed. We’re playing pure defense.

    It’s the same with the Gaming Industry. It’s been sucker-punched and blind-sided and they seem like they just don’t know what the heck to do…except ride out the storm and play defense. Meanwhile they’ve been mistakenly chosing to jettison very valuable things like quality, service, advertising (and maybe even slot-jackpots, for all we know). This Jettison Mentality is for the birds. It’s real sissy stuff IMO.

    I liked hearing DGS say this:

    “casino resorts will have to offer…unique experiences.”

    That’s a good offensive action for these gaming men to take. I still hold the strong opinion that Las Vegas needs to do some highly creative things to get people to want to come back here.

    Simply waiting for the convention business to pick-up again isn’t an offensive action. That’s a dullard’s way to act.

    This is a time when ALL of the casino people have to start providing more events and better entertainment and experiences. This is a time for using media publicity and a five-fold increase in advertising.

    Basically all Vegas has ever had to offer its visitors is a Good Time and a Party Experience. That’s about all we have to sell.

    But for nearly two years now – Las Vegas has hardly been even sending out any decent invitations. Jeez, you guys. Learn something from Sarno, if you have to. Think of some spectacular activities to announce to the world. Hire Evel Kneivel’s ghost if you have to…but do something spectacular….will ya.

    Bring back the Desert Sea News Bureau to start a heavy publicity campaign. Increase your advertising budget. Throw celebrity-parades on the Strip. Start giving local citizens some spectacular events to celebrate on the Strip. Create some kind of new Vegas Fever. Use your imaginations and quit thinking Vegas is all about number-crunching.

    Quit jettisoning the soul of Las Vegas. Quit acting so arrogant.

    That recent slap-in-the-face by Mc Murren (to all Las Vegans) still has me steaming. What arrogance! He doesn’t even visit Wynn’s Encore?!!! That’s pretty darn insulting. He doesn’t invite the locals out to City Center?!! THAT’S an “absolute catastrope” in a way. I’m starting to wonder if Mr. Trump was right after all.

    Mr. Kerkorian. Why are you allowing this man to insult us locals so openly. I sincerely believe he owes us locals a sincere apology.

    Yours truly
    EW1951
    InOldLasVegas

  2. Thanks for bringing this up Dr. Schwartz. From what I have read the last couple of months the top executives running these gambling companies pretty much think once the economy gets better everything will be all right in Las Vegas. Watching the NBC National News it seems like the news is constantly doom and gloom but most media outlets have also been pretty negative since the Lehman Brothers/Bernie Madoff fiascos of 2008 started to get the ball rolling downhill.

  3. FoolsGold says:

    In the short term the casinos do nothing but slash room rates and hope that suddenly brings in a gambler. Instead the casino seems disappointed when it brings in someone with only nickles and dimes and an attitude of nickle-and-diming the casino to death with his incessant demands for comps. Perhaps closing the hotel is the only option for the lower tier joints. Ultra low or even free rooms will bring in Guests but apparently not Gamblers.

    Is it that there are no Gamblers out there right now? I doubt that but perhaps the economy has affected the amount of money people will bring to Vegas. A hotel room lures a “visitor” but the casino wants a gambler.

    And yet I see calls for parades and more hooplah? Evil Knieval’s ghost? Go ahead. Contact the various booking agents. Bring in the screamers and partiers. What will it get you? You’ve got hordes of partiers in those clubs. Do they bring money to the casino? You’ve got hordes of half naked revelers in the swimming pools, do they bring money into the casino?

    Maybe “Vegas” is a poorly defined image. Are all those yellow page ads for Entertainer the real business? Are all those hordes of hookers really what people come to Vegas for? I know some people who take a break from the tables to have a few drinks and play “spot the hooker” but its a temporary diversion, its not a goal. Maybe the future of Las Vegas really does involve Gentlemens Clubs and Gin, but for me it involves Gambling. And if its going to be spectacles and parades and hooplah that the casinos turn to for salvation from the temporary woes, I won’t be there. I leave the tables when the hordes of frolicking frat rats in town for some game arrive at the casino. Maybe I’m in the minority. Maybe the casinos better really find out what their customers value before they invest in publicity stunts.

  4. EW1951 says:

    I agree that gambling perhaps should be the main focus in Las Vegas. It used to be. But after driving a cab here for seven years I saw that the type of visitors and the new LV demographic actually HAS shifted to the Frat-Rat-Pack.

    Old School Gamblers have basically been forgotten…which is evident by casinos like Wynn Las Vegas shooting for the younger crowd with its Tryst and Blush nightclubs. Wynn realized he could no longer cater as much to the Old School people and still survive financially. Plus, Old School Gamblers are getting too tired and grumpy to fly here.

    The younger bunch actually does gamble…but in a much different (and perhaps weirder and wilder) way than before.

    The new, young visitors spend (probably) as much on partying (at strip clubs, etc.) as they do in the casinos.

    As far as me. I don’t know what the heck I’m talking about half-the- time. My opinions are bogus and incorrect ALL the time. The only reason I actually write anything here is to try to keep from smoking cigarettes by keeping my hands on the keyboard instead…and (possibly) just writing stuff that might infuriate someone eventually.

    I have the delusion that Las Vegas may actually revive itself by doing heavy advertising. I remember the days when people like Sarno raised interest by holding boxing matches and…raising interest in Las Vegas by promoting ‘Knieval’ type hoopla. I’m just wishing for the days when Vegas did spectacular things to keep its name in the papers.

    As far as my stupid idea about parades goes…it’s just meant to be a springboard for BETTER ideas. The Strip needs to be filled with people. That’s all I’m saying. However the casino-people decide to DO THAT is up to them. I’m just giving them some junky, free ideas to think about.

    City Center isn’t doing much to get locals to come out to the Strip. There are people who will avoid an $8 billion dollar brand new casino and see it as not worth leaving there TV set to see.

    Yet….those same people (perhaps 300,000) might come out to see a parade-float with Robert Dinero and Joe Pesci waving at the crowd.

    A few people in the crowd might enter a casino before they leave the Strip. Even if they don’t…the (nation-wide) publicity from that event would be talked about for months. And people might start thinking that things in Vegas were coming back to life.

    I was simply trying to present various ideas to revive some interest in Las Vegas. I’m trying to prove that Vegas isn’t dead….cuz, all my hometown friends think it IS. They don’t see or hear as much about Vegas lately….cuz Vegas cut back on its advertising and publicity campaigns.

    There once was a shaving creme called Burma Shave that did the same thing with its ad budget.

    All my BS talk can be reduced to this one sentence: “Do more advertising, Las Vegas”.

    I purposely avoided the appeal to reduce room rates…since that method just reduces perceived value. All I’m doing now is suggesting the casinos increase their advertising.

    For the last six months Taco Bell dropped its price for hardshell tacos from 79 cents to 39 cents. I got used to the 39 cent price. Last week they raised their taco price back up to 79 cents. I no longer want to pay 79 cents for their taco.

    Cutting prices isn’t always the best thing to do.

    So, I’m merely suggesting that the gaming industry NOT cut their prices…but, instead RAISE their ad budgets.

    But what do I know? I can’t even afford a cell-phone or a cable TV connection. Don’t listen to me…cuz I’m basically crazy.

    Enuff said. I’d better lay-low for a few months. I’m making Dave’s site look bad.

  5. EW1951 says:

    I’m back to clarify a few things and to defend myself from being thought of as some kind of Dufus. Which I’ll bet anyone a million bucks I’m not. And if money is an object…I’ll even go so far as to bet a finger or other body part. So, how’s THAT for a real gamble Mr. Fools Gold?

    As for my idea about the Gaming Industry creating some great and attention grabbing publicity…there is NOTHING wrong with that idea. Who cares what type of people that brings in. As long as people have wallets they are potential gamblers. The casinos basically don’t care what kind of people are carrying cash..cuz they will definitely cater to them. And that’s a Royal Flush of a fact.

    As far as my idea about throwing a Vegas Revival Parade…what on earth is wrong with that? Downtown Vegas used to throw parades every year and all the casinos would make great parade floats publicizing their casinos. That’s part of Vegas History…and there’s not a thing wrong with such type of spectacle.

    This month the Strip was closed down for 6 hours for the Marathon. So, my parade idea is not an impossibility. And it could even be a modified, one lane, short parade if need be.

    Imagine a new parade of decked-out floats representing every Strip casino. A Paris float, a Luxor float, a Lance Burton or Carrot Top float…etc, etc.

    Imagine hiring the cast of ‘Goodfellas’ and actors from the movie ‘Casino’ for a day. (Deniro, Pesci, Liotta, Sharon Stone, the Mayor, Rickles, Sarvino). Heck. Maybe get them to come for free by honoring them with a key to the city. Have them wave to the crowd and have Pesci speak over a microphone “What? I’m a funny guy? I amuse you you, buncha mutts?” etc.

    Wouldn’t you come out to see a massive casino-parade…to see great sights like the ‘Goodfellas-Casino’ float?

    Wouldn’t you at least like seeing the news reports of a massive and spectacular event like that? Wouldn’t such a thing make you feel that Vegas was at least trying to show it’s still alive and well?

    This town was made to sell illusions. Lately it seems to have lost its spirit. So. I’m calling for a revival of Vegas Spirit.

    There’s not one darn thing wrong with my idea. And if it isn’t a parade it can be some other type of event that celebrates the city.

    (I already suggested a 9 month ‘Old Vegas Exposition’ to be held on the empty property where the Frontier used to be). And that’s a pretty darn good idea, whether anyone thinks so or not).

    World Fairs and Expos were meant to get cities and people out of the doldrums and to show the world they were back on their feet (Citation: The San Fran World’s Fair 1915 – Celebrating SF’s comeback after the 1906 earthquake).

    America is based on such things as spectacles and parades. Those things are as old as the hills and actually reflect patriotism, community spirit or the revival of various concepts.

    There is nothing stupid about my ideas to publicize Las Vegas in more phenomenal ways. My God. If City Center would have set aside a giant ‘party-fund’ and hired 100 big-time celebrities to simply stand in a circle around their front fountain and open a bottle of champaign (as a photo op)….that event would have been a coup and created a big-time, long lasting buzz.

    But apparently they blew their wad on steel and cement….or only held private parties that the public didn’t even SEE.
    —–
    As for all this rate-cutting.

    Like I said above. Taco Bell cut their taco-price in half (51% actually)…thinking that was the way to get more business.

    Meanwhile Del Taco DIDN’T.

    Now, I think of Taco Bell as thinking of themselves in a cheap way.
    I no longer will pay 79 cents for a Taco Bell taco…now that I realize they were even making a decent profit on their 39 cent sale.

    Instead, I now go to Del Taco…because they seem more classy, and didn’t under-value their own products during a recession. I have no problem with paying 79 cents to Del Taco because I feel they believe their tacos have 79 cents worth of value. They stood behind their product and didn’t cheapen it.

    In fact NOW…I’ve become a high-end buyer at Del Taco and sometimes even ‘spring’ for their $2.19 Big Fat Steak Taco or Fish Taco. They won-me-over by not cheapening their product. In fact, I’m now considered to be a ‘high-roller’ at Del Taco and they serve me cheerfully when I use their coupons to get Two Shredded Beef Burritos for $5. They feel pleased when people take part in their ‘Promo Deals’. And rightly so…cuz they see their promotions as paying off and ad money well spent.
    —-
    Anyway. I’m definitely cutting back on writing on this site. I only write to add fodder to the mix. If it bugs people that’s too bad for them. But I sure ain’t leaving here because things got too tough or because anyone scared me away. Not me. I’ll debate ANYONE forever if I feel I’m right. Which I do.

    I AM right. I’m 100% right and I know it! And if anyone feels like debating me you can write to my personal e-mail box and we’ll give it a go in private (for months if you so desire).

    So please don’t go raining on my parade again. Rainmakers have always gone after me anyway and I’m pretty darn sick of it. Go rain on your own parade.

    And by the way. What am I doing getting bothered by attackers on Christmas Day? Forget THAT. I have better things to do. I’ll go read a book.

    I’ve sort of been waiting for Dave to release the trap-door on me anyway. It seems inevitable.

  6. Joe Bob says:

    EW1951 — Nothing like a good old fashioned rambling rant! To keep it simple and in perspective Vegas was killed by greed. . . the same thing that led to the housing bubble, bank failures, and the recession. The bubble burst, the dream died, and year over year success vanished. The Corps were never willing to listen to the little guys like us, and instead followed their own twisted logic on what would continue to work for Vegas. They were wrong, and now we all suffer.

  7. Thanks for everyone commenting here about gambling and Las Vegas and sharing their opinions. Hopefully everyone had a Happy Holiday and everyone has a Happy New Decade. 2010 is here in a week so let’s get the good times to start rolling again in Las Vegas and throughout the United States.

  8. dave202 says:

    I like the thinking that EW1951 has brought to this thread. And he is right, although it looks like he already knows that. Vegas needs to reconsider its image and start to market itself the same way Sarno marketed his properties in the 1960s. For those who don’t remember those days, no one was beating a path to the Vegas door. You had to give people a reason to come to Vegas. Yes, part of that reason was gambling, because Vegas (and Reno) were the only games in the country. But today, there needs to be good solid reasons to attract people to Vegas. And discounting won’t do it. Do you think Sarno discounted Caesars Palace when he built that? No way. (Maybe that’s one reason he went belly up!) But Vegas needs a new message, new events. Remember last year when we had the two motorcycle extravaganzas on New Year’s Eve? What’s happening this year to bring people here? The usual fireworks? (Well, at least we’ll be able to SEE them this year!) No one has any imagination. Celebs would be a great idea. Maybe new amusements. Maybe a classic car parade with celebs in them. Whatever is a great idea should be tried. Vegas needs that kind of excitement again!

  9. EW1951 says:

    Today, while doing some Internet research, on the architects who designed City Center, I stumbled upon something which I think is very interesting.

    It seems that one of the designers of Crystals (David Rockwell) is a ‘big wheel’ in the design world.

    He designed Nobu restaurant, parts of the Kodak Theater, The W Hotel, the 81 Annual Academy Awards Ceremony and also did set-design for the movies ‘Hairspray’, ‘Legally Blonde’ and ‘Dirty Rotten Scoundrels’.

    As I searched further into his history – I found out that he wrote a very interesting book (back in 2006) which I’ve never even heard about.

    His book is titled ‘Spectacle’.

    Amazon describes the book:
    “Spectacle explores the allure of larger-than-life events that take place around the globe. From the running of the bulls in Pamplona to the Holi Festival in India to roaring – and risky – NASCAR races, Spectacle considers what it is about these “shared, live experiences” that transforms not only the way we see the world, but also how we connect with each other”.

    Individual chapters of ‘Spectacle’ discuss such things as:

    * The Olympic Opening Ceremonies
    * Macy’s Thanksgiving Day Parade
    * Las Vegas
    * World Fairs
    * The Circus
    * Burning Man
    * Ticker Tape Parades
    * Fireworks
    * NASCAR Races

    etc, etc.

    Rockwell’s Internet PDF says “Spectacles ARE BRIEF, Spectacles CONNECT, Spectacles TRANSFORM, Spectacles IMMERSE”.

    (the ‘capital letters are his, not mine).

    It seems this man well understands the need and appeal of Spectacles.

    I don’t wish to belabor this issue with anyone (or especially with Fools Gold – who said:)

    “if its going to be spectacles and parades and hooplah that the casinos turn to for salvation from the temporary woes, I won’t be there.”

    But…since I placed a bet that I wasn’t a Complete Dufus (and also since I bet a finger!)…it was good to see that my simple idea for a dash of “spectacle” shouldn’t have been dismissed as simply being a call for “publicity stunts”. Or the ideas of a Dufus.

    There is a huge difference between “publicity” and publicity “stunts”. The word ‘stunt’ has a demeaning connotation.

    ——
    Anyway.

    It seems like a good time for all the casino owners to gather and meet to discuss the idea of creating some kind of joint Las Vegas Spectacle.

    It seems like a good time for casino owners to gather together, join hands and pool some money for the production of a Grand Spectacle which celebrates Las Vegas in a special way. (They could hire David Rockwell to produce it).

    It seems to me that these bad economic times are testing the casino owners in an ironic way…almost as if some higher power wants to see if the casino owners have the Gonies to actually go “Full In” …in some kind of Ultimate Metaphorical Poker Game.

    Maybe my views are too mystical (or loony). But, to me, it almost seems like God is challenging the casino owners to an ultimate test of their gambling beliefs.

    I wonder if the casino owners really have the courage to Ante Up and properly WIN this economical poker game?

    They can either gamble to quicken their own Economic Recovery…or sit on the sidelines hoping things will ‘eventually’ get better.

    Gambling takes bold moves and courage. Maybe God is comically looking down and watching to see if the Gaming Industry still has the Gonies to play the game they’ve been selling for all these years.

    ——–
    I truly hope I’m not offending anybody with my unusual writing style or odd ideas. I’m not purposely trying to offend anyone. Please give me a break. Seven years driving a Strip-Cab made me think I earned myself some type of weird Ph. D in Las Vegas-ology.

    Excuse me if it’s gone to my head.
    ========
    (Note to self: I think that rant saved my “finger”).

  10. American Gaming Guru says:

    I love reading the feedback that you all give. This website obviously produces some great ideas and healthy discussion. With that in mind, I would have to disagree with EW1951 in one respect. I believe that many American’s (including myself) and corporations are taking a very offensive approach to the economy in getting out from what got us all into trouble and that is DEBT! American’s are spending less, but paying down debt at the same time and that is where is offense it taking place. Cheep debt kept the economy humming, but in the long term became the root of its catastrophe. The casinos are feverishly doing the same, while we may not like their focus, it seems to be a more prudent thing to do at this time. De-lever, re-capitalize, renew. But, at the same time I agree with all of you here that a little bit of creativity to recapture the market can go a long way!

  11. EW1951 says:

    Point well made and taken AGG. I hadn’t considered the ‘silent work’ taking place behind the scenes. You are right. Being prudent is probably the best course of offensive action right now. I hadn’t looked at it that way.