Tag Archives: Las vegas strip

Too many rooms? on NPR

August 17, 2010 12:13 pm

My interview with Steve Inskeep of KNPR’s Morning Edition has aired:

Las Vegas just added a bit more bling to its famed Strip with the unveiling of a new marquee for The Cosmopolitan — a resort-casino opening at the end of the year. There already are questions about how the city will absorb another 3,000 hotel rooms. Las Vegas has been hit hard by the down economy and is struggling with a glut of rooms. David Schwartz of the Center for Gaming Research at the University of Nevada Las Vegas talks to Steve Inskeep about the city's fortunes.

via Does Las Vegas Really Need Another Hotel-Casino? : NPR.

I had great conversation with Steve. It’s not an easy topic to discuss because there are so many variables. In the end, it seems like it’s just as much a crapshoot as anything on the casino floor. Which is ironic, perhaps, but maybe apt.

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Bacc talk in LVBP, thoughts on empiricism

August 10, 2010 8:39 am

This week’s Las Vegas Business Press column takes a closer look at the game of baccarat, which is becoming more and more important on the Strip:

At the level of the individual casino, there are even greater swings of fortune. Unlike Nevada, New Jersey discloses separate results for each of its casinos. This allows analysts an eye into what can happen in a given month.

via Las Vegas Business Press :: David G. Schwartz : Baccarat and its wild swings crucial to Nevada.

You can read the original baccarat longitudinal microstudy here, if you want to see the numbers behind the column.

One question I sometimes get is what the value of all of these statistical studies are. The answer is that they add a very important dimension to understanding what’s happening around us, which gives us better insight into how to change it for the better. Becoming more reliant on baccarat–as its currently played in Nevada–has definite consequences for the industry and the state, some good, some bad. It’s important to talk about this as the trend is unfolding, rather than waiting until after it’sp already arrived. If everyone had been looking closer at the revenue jumps in 2005-2006, we’d probably had reacted much better in 2007 and 2008.

But numbers never tell the whole story, which is one of my issues with the “purely empirical” approach outlined by Gary Loveman in this Bloomberg profile. Gambling and tourism are hospitality industries, which start and end with customer interaction and creating an experience for the guest. Metrics are an important part of running the business, but they should support, not define, the approach. Whether you call it action, fun, or excitement, that’s what your “core message” should be.

In other words, it’s not “gamble at our casino, because we’ll offer you a competitive package of comps to get your $529 theoretical loss per trip.” It’s “come here and have fun.”

I’ve been thinking a lot about this angle because I spent much of the week at the Star Trek convention at the Hilton, where I was able to really immerse myself in fandom and talk to the people running the show. I’ll be spinning Vegas Seven and Business Press pieces out of my observations, which will also relate back to the “empiricism vs customer-centered” argument.

There were really a ton of great stories there, from both the fans and the actors.

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The Burger King Revolution

August 4, 2010 1:03 pm

It’s a happy day in UNLV gaming-land. An article I wrote a while back about how Las Vegas bounced back from the 1980s recession is out in Gaming Law Review and Economics:

MOST WHO HAVE CONSIDERED Las Vegas history have concluded that not much happened in
Las Vegas gaming between the openings of the original MGM Grand (1973) and Mirage (1989). In fact, several structural changes during the 1980s had already reversed a declining appeal. Responding to three crises—competition from Atlantic City, a national economic downturn, and the MGM Grand fire—Las Vegas casino operators began to draw more extensively on a middle-class mass market. Capitalizing on the “Burger King Revolution,” Strip casinos drew more gamblers who, on average, played less, and slot machines displaced table games as the industry’s leading revenue producer. This successful strategy broadened the city’s visitor pool and created a base for later expansion.
The Burger King Revolution: How Las Vegas Bounced Back, 1983–1989

Enjoy reading it while you can–I think that the article’s only available to non-subscribers for 2 weeks. If you’re a casino professional, you should definitely consider a subscription to GLRE, since it’s packed with informative articles.

I didn’t do too many interviews for this article–I mostly used documents–but I’ve got to say that Jeffery Silver was great to talk to. He was not only an expert on the subject, but has a keen sense of humor and was remarkably generous with his time.

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Mixed May message

July 7, 2010 7:13 am

The May numbers have been released from the Nevada Gaming Control Board, and while on the surface they seem to be not such bad news, they actually send a mixed message. Here are my thoughts, broken down by region.

Statewide
Across the state, the gaming industry continues to shrink–we’ve got about 2,500 fewer slots and 70 fewer table games, despite the addition of a major new Strip casino since last May (Aria). It’s the equivalent of the net loss of a big Strip casino.

Slot revenue increased slightly for the month (0.44%), but this isn’t a sign that slot play is picking up. On the contrary, statewide slot handle–the amount actually played by players–continues to fall. The bump in revenues was due to a higher slot hold percentage–6.06% vs. 5.58% in May 2009. The handle fell from $10,094,516 to $9,336,733. This is the lowest handle in years, and it is a sign that people are in fact gambling less in Nevada. The slot handle has been declining steadily since 2006; earlier gains in revenues came because of higher hold, not more play.

Tables told the opposite story: revenues were down because of lower-than-usual hold, particularly at blackjack (10.37%) and baccarat (8.40%). The usual hold for those games is about 12-12.5%. But handle was up–partially, but not completely, due to a rise in baccarat play. So table play doesn’t look so bad.

Las Vegas Strip
The Strip saw the same general pattern as the state, with greater extremes: the slot hold was higher (6.94%), the overall table and baccarat holds were lower (10.47% & 8.26%). The slight gain in table handle seems to indicate that higher-end play is stabilizing, but not leading a recovery. It’s worth noting that there are more tables and slightly more slots on the Strip, so overall, handle-per-unit is probably down.

Boulder Strip
My favorite barometer of local Las Vegas gambling followed the same pattern as the Strip, with even more extremes. Slot hold increased from 4.24% to 5.55% (still lower than the holds for Mays 2005-2007, and slot handle declined from $1,253,821 to $1,068,378.

Overall table hold was a catastrophic 8.02%, though the table handle was up. They got hammered at craps (9.01 hold%) and absolutely slaughtered at mini-bacc (-15.48 hold%–yes, they actually lost money!). It’s either lucky players, bad management, or something worse.

Washoe County
Up north, things were quieter and much more consistent. With a decrease in slot hold, both handle and revenues fell slightly. Table hold increased a bit, but again both revenues and handle declined. Washoe County continues to gently coast downward, with no end in sight.

So there’s really no conclusive lesson to be drawn, except that we are definitely not seeing a recovery of slot play, and any gains in revenues are coming because of higher holds, not more play.

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MGM name game in Vegas Seven

July 1, 2010 11:54 am

When MGM Mirage changed their name to MGM Resorts International, I wasn’t bowled over. “Resorts International” is forever linked in my mind to May 26, 1978, and a big red hotel on the Atlantic City Boardwalk (sure, it’s been painted white for 20 years or so, but in my mind Haddon Hall will always be red).

But I figured instead of just blathering on about it myself, it would be a good idea to find two people who specialize in corporate branding from outside Las Vegas to get a better perspective on what the name change means to people who’ve got a broader view. I was lucky to talk to Alina Wheeler and Laura Reis for today’s Vegas Seven column:

Two weeks ago, company shareholders approved a name change: MGM Mirage became MGM Resorts International. It was a major change, but was it good business? According to two corporate branding experts, it was.

MGM CEO Jim Murren outlined the change as an “evolution” that “honors our heritage, better represents the growing global presence our company has today and positions us to move forward under a unified brand strategy.”

Laura Ries, president of marketing strategy firm Ries and Ries, and co-author of The 22 Immutable Laws of Branding HarperCollins Publishers, 1998, thinks this was a good move.

via Analyzing MGM’s old new name | Vegas Seven.

Really interesting stuff from both experts. I still think “MGM Resorts International” is way too long, and kept on tripping over it when I was talking about the company in a TV interview last week, but “MGM Resorts” or just “MGM” works fine.

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It’s (possibly) a faaake!

June 22, 2010 10:00 am

Really good piece in the LV Sun today about the rise of phony online hotel reviews, and what travel sites are doing about them:

The rise of traveler-generated online reviews has forced hotel managers to contend with anonymous posts from angry or disappointed customers.

For people in the business of promoting Las Vegas hotels, it has also opened the door for sneak counterattacks in the form of bogus positive reviews created to boost their clients’ image among the traveling public.

via Customer may not have written that online hotel review – Tuesday, June 22, 2010 | 2:01 a.m. – Las Vegas Sun.

The potential for industrial espionage is just about unlimited with online reviews. With a lot of money at stake, I’m not surprised that some people would try this.

Looking at a few out-of-market hotels recently, I saw that one hotel owner responded to a negative review by claiming it was put there by rivals trying to ruin him/her. While that may have been true, it came across as paranoid.

When I look at online casino reviews, I assume that you’re always going to have a small percentage of cranks who aren’t happy with anything. Looking at all the reviews, though, you see trends emerge: if most people say that hotel is noisy, or has bad service, or has the best blueberry muffins in the state, it’s a fair bet that this is a genuine response.

As far as TripAdvisor goes, it judges just how happy guests were with their stay, rather than the amenities or value a property provides. For the top 20 Las Vegas hotels (as of right now), there are just 7 five-star hotels–the rest are 3, 4, and even lower.

That being said, unless there’s a widespread campaign to sabotage Aria, you’ve got to consider that they’re tracking far below the other resorts in their class on TripAdvisor–ranked at #66 in the market, they are below the Four Queens and Planet Hollywood. While some of this may be because guests at the Four Queens have lower expectations, the fact that other five-star properties are ranked sixty places ahead of Aria should be a red flag that there are, at the very least, customer service issues at the resort.

I’d agree with Professor Erdem that casinos should really be using the negative reviews to engage their guests. At the very least this will help to weed out the bogus reviews, and at best it will help them resolve some issues.

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April numbers tell a story: volatility

June 10, 2010 10:41 am

The Gaming Control Board has released Nevada’s April 2010 gaming revenue numbers.

To give everyone some perspective on the month, I’ve put together a new report: Nevada Gaming Statistics: April Comparison. This four-pager charts the performance of Nevada casinos over the past 7 Aprils. This month, we’ve got four reporting areas: Statewide, Las Vegas Strip, Boulder Strip, and Washoe County. This gives us the overall state situation, as well as foci for tourism (LV Strip), locals (Boulder Strip) and northern Nevada (Washoe County).

Metrics include:

* Total, slot, and table revenues
* Slot and table hold percentages
* Slot handles and table handles
* Numbers of tables
* Baccarat revenue, handle, hold data (statewide and Strip only)

You can find the report here: http://gaming.unlv.edu/reports/NV_april.pdf

So what do the numbers mean? Continuation of the trends that have been dominating since the fall, and something of a warning shot.

Overall, revenues for the state are down slightly. There’s a clear divergence between tables and slots: slot revenue declined by about 8%, while table revenues increased slightly. The divergence is clearer when you look at handle, the total amount played. Slot handle for the state declined by more than 6 percent–the lower hold explains the higher revenue decline. Table handle, though, was up by a little more than 1 percent. If not for bad luck at the bacc tables, table win would have increased.

Nevada April numbers--statewide

Nevada April Gaming Stats--statewide

Ahh, baccarat. In April the chickens finally came home to roost. Since the January numbers came out, I’ve been warning people that since A) the state is relying more on baccarat win and b) baccarat has a great deal of volatility, eventually the odds will turn against the house. That happened in April. In recent years, the average baccarat hold has been about 11.5 percent. This April, it was only 8.48 percent statewide–about a 26 percent drop.

This is significant. If the state’s bacc tables had held 11.5 percent, the state’s bacc revenues would have been abuot $80 million instead of $59 million– more than $20 million more in money to pay salaries, and more than $5 million in tax revenues that the state could surely use. Baccarat can be lucrative, but it’s not a great base to build your tax structure on.

Looking more closely at the Strip, it’s clear that Aria’s just not giving the bump that people had hoped it would.

Nevada Gaming Statistics--April, LV Strip

Nevada Gaming Statistics--April, LV Strip

Both slot revenue and handle posted small declines, even as the number of slots went up. Table revenues increased by about 5 percent, which didn’t quite offset the slot decline. Baccarat handle increased by about 23 percent, which is good, since the number of bacc tables increased by 16 percent. So as far as baccarat goes, at least, supply is keeping up with demand. April 2010 was the biggest April for baccarat play in history. But outside of baccarat, there really isn’t much recovery on the Strip.

Another noteworthy area was the Boulder Strip, which saw slot revenue fall by more than 23 percent, though a much lower hold (4.63% vs 5.15%) had much to do with it. Still, overall play continues to decline in the Las Vegas locals market.

Someone got hammered at the tables–table hold percentage fell from 12.93% in April 2009 to 6.63% in April 2010–a decline of nearly 50%. Handle was actually up by about 10 percent, but the dice just didn’t fall the house’s way this April.

So the theme of the month was volatility is not always your friend. With bacc win representing more than 7 percent of gaming revenues this month, it’s clear that the gaming business is becoming more of a gamble for everyone.

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Trop tale in Vegas Seven

May 20, 2010 11:29 am

My latest Green Felt Journal piece is out, in Vegas Seven. I get to name-drop Heraclitus to sound sophisticated before talking about the redo of the Trop:

That’s because the only thing that doesn’t change around this town is change. There are few other places where anyone would even consider spending $150 million to “relaunch” a resort that cost $1.4 billion to build a mere seven years after its opening. But when that happened at the Aladdin/Planet Hollywood in 2007, few were surprised.

A similar change is taking place at the Tropicana, and not a moment too soon. One of the oldest resorts remaining on the Strip (it opened in 1957), the Tropicana, after an increasingly parsimonious corporate stewardship over the past few years, is enjoying a renaissance under the leadership of Alex Yemenidjian, chairman and CEO of Tropicana Las Vegas, and new president Tom McCartney.

The current economy dictates nothing too ambitious—certainly nothing like the 10,000-room mega-expansion previous owners Columbia Sussex mooted back in 2006. With a recent Tropicana financial filing admitting there is an “imbalance” in room inventory, it’s not a question of trying to add capacity, it’s about competing with bargain rates at younger properties.

via Transforming the Tropicana | Vegas Seven.

Interesting to see what’s going on there–and if you’re in town, enjoy the opportunity of seeing the casino in mid-change.

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Casino pools warned

May 12, 2010 6:39 am

Great story from KLAS about efforts to police the seamier side of the Las Vegas casino pool culture:

Clark County Commissioner Steve Sisolak says what happens in European-style pools around the world doesn't necessarily happen in Las Vegas. "International visitors have increased considerably, and this is something that they've asked for," Commissioner Sisolak said. "There is certain behavior that's acceptable. There's certain behavior that's not acceptable… Lewd behavior will absolutely, 100 percent not be tolerated. That's not what this is about. It's not a party atmosphere."

The atmosphere turned into a hard-core party last summer at the Rio's Sapphire pool. Police arrested eleven people on a plethora of charges including prostitution and drugs.

"A lot of people said, 'What did you expect when you had a strip club running a swimming pool? You should have been able to figure that if you had dynamite and matches, they weren't going to mix very well,' which is true. I think we learned our lessons there," Commissioner Sisolak said.

Another undercover operation last year netted eight arrests for drugs and prostitution at the Hard Rock's Rehab pool party. "Nobody wants to abuse this, and if anybody gets out of line, appropriate action will be taken swiftly," Sisolak said.

via County Issues Warning to Las Vegas Strip Pool Operators – KLAS-TV Channel 8 News Las Vegas.

Here’s the story itself. I encourage you to watch it, if only to enjoy reporter Aaron Drawhorn’s read, which I think is one of the best in town.

There’s going to be a Metro detail policing this stuff this summer…I’m sure guys are dreading being picked for that one.

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Wynn points to the future

May 4, 2010 7:24 am

I’ve got a new Las Vegas Business Press column up, in which I discuss the historical context behind Wynn’s musings about moving to Macau.

Steve Wynn made headlines when he suggested he might consider moving the headquarters of Wynn Resorts Ltd. to Macau from Las Vegas. As always, Wynn's forthrightness points the way to a larger truth about the future of the casino industry.

Wynn Resorts is a Las Vegas success story. Since moving here in 1967 as a part-owner of the Frontier, Steve Wynn has been one of the city's prime movers.

He began making a mark in 1973, when he became the chief executive officer of the Golden Nugget, then a small downtown casino with no real distinction.

Wynn's aspirations outside of Las Vegas have always been an important piece of the puzzle.

via Las Vegas Business Press :: David G. Schwartz : When Wynn speaks, gaming listens.

I think that many of the so-called pundits have reacted more emotionally than rationally to Wynn lately, particularly since he’s become critical of the current administration, and that’s what’s driving some of the comments out there. We talked about this a little on the latest Vegas Gang.

Wynn’s political opinions and the possibility of his moving the headquarters of his company are, I think, two separate issues. It’s not like he’s threatening to go John Galt on us: he’s just saying that he might move more elements of Wynn Resorts to the city that is its top market. People give another prominent CEO grief for not living in Las Vegas, since that’s where the action is, and by this logic they should be demanding that Wynn spend more time in Macau.

The most fascinating thing about Wynn is that, like Jay Sarno, his career doesn’t have a single, predictable arc. If he did, he’d have just kept expanding the Golden Nugget or, at the very least, staying with that brand. Instead, you’ve had forays into Atlantic City, Mississippi, and Macau, with the sale of Mirage Resorts along the way. All the time, he was reacting to changing conditions. If things had gone differently in Atlantic City, he might not even have built the Mirage, or at the very least would have built it in Atlantic City, and casino history would be much different.

So it wouldn’t entirely surprise me if the next stage of Wynn’s career takes him in a completely different direction. It’s happened before and there’s no reason to think it won’t happen again.

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