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Las Vegas Sands cuts comps for middle-tier gamblers7 February 2011
By Howard Stutz
High-end gamblers still receive benefits, such as show tickets and meals.
Company officials said the move was taken to drive the bookings of hotel rooms through group sales and Las Vegas Sands' alliance with InterContinental Hotels, which began marketing The Venetian and Palazzo through its 52 million-member rewards program last fall.
During Las Vegas Sands' fourth-quarter earnings conference call, company Chairman Sheldon Adelson said the elimination of comps has helped sell hotel rooms at The Venetian and Palazzo, resulting in a substantial increase in cash income.
"We know that the subject of comps has been played out all across Las Vegas, but we've taken a different position," Adelson said. "We've essentially cut out all our accounts except the most highly rated players. No more packaging deals to try to be competitive with others. There's no more comp rooms given out. There's no more food and beverage. There's no shopping credits. There's no restaurant credits. There's no showroom credits."
Gambling expert Anthony Curtis, who operates the Las Vegas Advisor website, said he heard rumblings over the past few weeks about the Sands' new comp policy. He said what was unclear is where the company was drawing the cut-off point.
"What happens to your slot club?" Curtis said. "The comp system is a very vast network. I've never heard of not comping the middle market. This could be a terrible thing."
Neither Curtis nor Union Gaming Group principal Bill Lerner had heard of other casino operators on the Strip instituting drastic changes in their complimentary systems.
"If they have, it's been much more quietly done," Lerner said.
Las Vegas Sands grew net revenues at The Venetian and Palazzo by 16.5 percent in the fourth quarter to $310.6 million, which was just 15 percent of the company's overall $2.02 billion in revenues during the period that ended Dec. 31.
The company said its adjusted cash flow in Las Vegas during the quarter was $80.6 million, an increase of 41.7 percent from a year ago. Las Vegas Sands officials said operating efficiencies and the reduction of comps contributed to an adjusted property cash flow margin of 25.9 percent.
Lerner said casino operators have tightened their promotional offerings over the past few years as a cost-cutting measure to deal with down revenues brought about by the economy.
The actions by Las Vegas Sands show the influence hotel operations have in the company's management structure. The shift toward group bookings helped Las Vegas Sands book 90,000 hotel room nights in January at The Venetian and Palazzo, which have a combined 7,000 rooms.
"There are more hotel guys in the organization than in the past," Lerner said. "The place is being run differently than it was in the past."
The 10-year deal between Las Vegas Sands and InterContinental also influenced the changes. The hotel company doesn't have a property in Las Vegas and the corporation's president said the Strip is the No. 1 requested destination by InterContinental customers.
"Our expectations for our InterContinental alliance are very high," Las Vegas Sands President Michael Leven said. "We're working hard on it, particularly on the technology side. We think that will fill a lot of the voids in the competitive environment and with probably the transient part of the marketplace."
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Las Vegas Sands cuts comps for middle-tier gamblers is republished from CasinoVendors.com.