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.
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.