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Arnold M. Knightly

Silverton thriving in downturn

17 July 2009

LAS VEGAS, Nevada –- The Silverton's top official is glad the property didn't proceed with building a new 360-room hotel tower that was scheduled to open this fall.

When the local housing market crashed and funding for construction projects dried up, the Silverton switched gears and decided it would need to change its plans some for competing with other locals casinos.

The Silverton launched an aggressive advertising campaign that has helped the hotel-casino buck the trend that has left other casino properties struggling in the economic downturn.

The "That's Livin' Lodge" ad campaign, which includes television, radio and print ads, has reintroduced the Silverton to local residents and is helping to stave off competition from the resort's newest competitor, the nearby M Resort off Interstate 15.

"We've never had to be that aggressive," President Craig Cavileer said. "We haven't been on TV since 1998. We decided we were going to own the market on local television and print in the first half of this year, which I think we did."

The property experienced a quick return on its most-expensive ad campaign ever, growing its player database by 70,000 new players this year. During one four-week promotion, the property gave away 36,000 Snuggie blankets to player card members.

And on the Silverton's 12th anniversary Sunday, the casino attracted the most players in its history, Cavileer said.

The ad campaign was launched in December, less than three months before the March 1 opening of M Resort.

Property executives sat down to determine "how do we define what the Silverton is and we came up with the 'That's Livin' Lodge' slogan that's been the backdrop for all of our messaging," said Cavileer, sitting at the property's new $2.5 million Flare Bar.

The ad campaign's launch coincided with the opening of a $160 million expansion that included a new parking garage, restaurants and additional casino space.

The casino has increased casino revenues by double-digits even while revenue is decreasing steeply in the overall market, Cavileer said.

Even with the marketing campaign's success, the 300-room hotel is still doing just slightly better than the rest of the market, with an occupancy rate of 90 percent. The property's database helps offset the dip in free and independent travelers visiting the property.

The average daily room rate, however, is down 20 percent from last year, largely because of the heavy discounting being offered by Strip resorts, Cavileer said.

"For so many years we owned the geography of the southwest," Cavileer said. "The strategy became, 'How do we protect our database with the M opening?' The economy is worsening. The customers are still going to be out there. They may be playing less and spending less money, but they're still out there making choices."

The troubled economy and the decline in casino customers and spending by customers keeps Cavileer busy working on new marketing ideas. He estimates he spends as much as 90 percent of time on that effort.

Today's bad economy isn't the first time the Silverton has had to overcome problems, though.

When owner Ed Roski Jr. took over the Boomtown in July 1997 the property was struggling financially.

The $70 million Boomtown had been a partnership between Roski's Majestic Realty Co. and Boomtown Inc., a Northern Nevada casino company that owned a similarly named property near Reno.

The remote location at the corner of Blue Diamond Road and Interstate 15 was one of the property's biggest issues. Cavileer said Boomtown also suffered by poor management before Roski took over.

One of the Silverton's early challenges after Roski bought the property was to bring staffing levels down from 1,400 employees to nearly 900, a level that is maintained to this day even though the property has quadrupled in size.

"They didn't know how to operate a business, so they kept staffing it and staffing it thinking that would solve problems," Cavileer, who took over as property president in January 1998, said. "(That) is one of the reasons they were going out of business. They had a staffing model that was challenging to say the least in terms of labor cost."

Although Roski has taken the property from what Cavileer described as a "roadside truck stop casino" to a resort with all the amenities, the owners still see more to do, Cavileer said.

"The path was not too far off from what we expected," Cavileer said. "If there is a surprise, the surprise would be we haven't added the rooms that would make this a complete resort. We don't have enough rooms to really drive the out-of-town business on weekends that we'd like to."