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Gaming Guru

Richard N. Velotta

Execs: Nevada's Success Lies in Investment

8 December 2004

LAS VEGAS -- Two Las Vegas gaming executives say there is an ever-increasing need for capital investment in attractions and attention to quality customer service if Nevada is going to maintain its edge as the premiere gaming destination in the world.

Speaking Tuesday in separate keynote addresses at the three-day Governor's Conference on Tourism, Alan Feldman, senior vice president of public affairs for MGM Mirage, and Marilyn Winn, senior vice president and general manager of Harrah's Las Vegas and the Rio, gave upbeat assessments of how the state's casino interests can stay ahead of an increasingly large field of aggressive competitors.

The Governor's Conference, which has drawn about 600 people who dodged rain and snowstorms to attend, concludes today at the Reno Hilton.

Winn chronicled how Harrah's Entertainment Inc. has evolved strategically since hiring Gary Loveman as its president and chief executive officer, while Feldman said local companies must invest in the "wow factor" to convince visitors to keep coming to Las Vegas.

Winn explained how Harrah's has built customer loyalty by encouraging high customer service levels from its employees. She said when Loveman was a Harvard University professor he helped develop a program to increase revenue by boosting customer loyalty.

"It's called the service profit chain concept," Winn said, "and the basic message is that a satisfied customer becomes a loyal customer."

Harrah's has become a model for tracking customer habits with its Total Rewards loyalty program, which now has 28 million members. Winn said the company has been able to use information from customers to quantify how well employees are serving customers.

The company has an employee report card system in place and when workers achieve a certain level of quality in quarterly assessments, they become eligible for cash bonuses. Winn said the company has paid out $50 million in bonuses since the program began.

But the results for the company have been staggering, she said. The company has gone from a share price laggard in 1998 to a market leader today, positioning itself for numerous acquisitions of properties and brands.

The company has continued to expand its franchise to new jurisdictions and is in the midst of acquiring Caesars Entertainment Inc., a deal that is expected to be completed early next year.

The company also acquired the rights to the World Series of Poker and spent $2.5 billion on facility upgrades since 1998, including major improvements at Harrah's Las Vegas and the Rio.

An emphasis on customer service, she said, keeps customers loyal to Harrah's and that attitude can keep them loyal to Nevada.

Feldman, meanwhile, emphasized that the state's success would lie in reinvesting capital in products that have been successful for years.

He said what people want from Las Vegas really hasn't changed much over the years.

"The reasons people come have not changed," he said. "We've changed the box that the product comes in, but the things that they seek have not changed."

What visitors are looking for, he said, are excitement, escape, a fantasy experience and indulgence -- and they're finding that in restaurants, clubs and show rooms, not just on the casino floor.

Feldman showed slides of some of MGM Mirage's new restaurants "and not one of them was put in for under $3 million." And, he also said the company's relationship with Cirque du Soleil has been a major investment.

"Our newest show, Ka, is being developed at a cost of $165 million," Feldman said. "That's more than the cost of many of the hotels that have been built in Las Vegas."

He closed out his presentation with some computer-generated images of the company's recently announced CityCenter project, which will include three boutique hotels, a 4,000-room hotel-casino and a vast array of retail outlets.

Feldman said the company received moderate interest from several firms when they were approached by MGM Mirage prior to the CityCenter announcement last month.

"Once we made our announcement," he said, "we had a flood of companies interested in coming in."

Execs: Nevada's Success Lies in Investment is republished from