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Best of Liz Benston

Gaming Guru

Liz Benston
 

Casinos again loosen up on rooms, meals

15 December 2008

LAS VEGAS, Nevada -- Strip casinos lost the business of people like Fred Jones years ago, when the business model for which the industry was known — free meals and rooms for gamblers, even low rollers — was phased out.

It was replaced by a strategy focused on maximizing profit across all business segments.

Now, an unprecedented falloff in business has many casinos dusting off old strategies and returning to less profitable, though perhaps more predictable, ways of earning money.

Some hotels are offering double-digit discounts on rates as well as package deals that nearly equal the cost of a room. One example: On selected days in January, rooms at MGM Grand will go for $59 and include a $25 "activity credit," $10 in free slot play and nightclub passes.

Other hotels are offering free stays for customers with gambler loyalty cards.

Casinos are willing to bet customers will offset the cost of these deals with gambling losses — even when there's little evidence that customers will gamble. (Some customers haven't used their cards and others haven't gambled with them much.)

Last week, the Terrible's-owned casinos in Primm went a step further by advertising free rooms as well as passes to rides and shows for locals. Customers who accept the offer might end up spending more money in the casino than they would otherwise — or nothing at all.

Many locals casinos still have loss leaders such as cheap buffets and drinks and typically offer better gambling deals than Strip properties.

Lately, these lines are blurring, with Excalibur offering a 2-for-1 buffet, South Point offering half-off meals and other purchases for gamblers using loyalty card points and the Sahara offering cash back, free slot play and "comp dollars" that can be spent on rooms, in restaurants and in stores.

Such deals don't impress Jones, who remembers when small-time gamblers like him could get a free meal from the pit boss just by asking.

"Pit bosses and supervisors just don't have that authority to give comps anymore," he said. "Now, if you want a meal, you'd better have enough points in your account."

Jones, a 27-year resident of Las Vegas, has rarely visited the Strip since the Stardust was torn down. He liked the property's folksy atmosphere and the attention paid to locals. The $6.99 prime rib was worth a trip, too.

"I might go on the Strip if we have friends from out of town," he said.

For many, the loss of budget hotels in recent years, as well as the opening of luxury hotels, was yet another sign of rapidly disappearing giveaways for the masses. Perks would now be determined by conservatively programmed computers.

Before the downturn, some Strip executives said freebies for low-rollers or nongamblers were unrealistic because they were unprofitable and inconsistent with the image of a high-end resort.

How can we make a profit if we're giving stuff away? That's so last century! Ever heard of inflation and labor costs? they seemed to say.

And yet, that's how casinos used to make money.

As if playing the last card in the deck, they are trying it again in the hope that the goodwill will encourage customers to spread more money around.

With roughly 8 percent of hotel rooms in Las Vegas going unfilled and gambling revenue down 14 percent on the Strip so far this year, this also goes for properties that are a bit rusty in the deals department.

Before he moved to Las Vegas from Los Angeles, Jones gambled in Las Vegas during the Rat Pack days. Memories of such experiences die hard.

That's one reason why Jones, whose opinion reflects that of countless Las Vegas customers, believes this is too little, too late.