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Rod Smith

Casino Giants Take Different Online Approach

14 November 2003

LAS VEGAS -- Three casino giants, amid shifting trends in online room reservations and online gaming, are taking sharply different tacks.

A recent survey by Goldman, Sachs & Co. Investment Research found that customers booking rooms online between August and October saved an average of about 5 percent on room rates compared with about 20 percent the year before. In addition, the survey showed room rate discounts are becoming less of a lure for customers.

Because of the changing attitudes and technology, Park Place Entertainment Corp. recently redesigned its Web sites to focus more on accuracy of information and ease of use.

"Basically, we're moving with the times. As more and more people are pressed for time, they go online and we're making it easier for them (to make arrangements quickly)," said Steve Rosen, senior vice president for marketing.

The company is serious about expanding its Internet business because of the growth it has helped generate in the past three years.

So far this year, Park Place has sold more than 500,000 domestic room nights through its 19 U.S. Web sites, up 31 percent from 386,000 room nights for all of 2002, 269,000 rooms in 2001 and 114,000 rooms in 2000.

Similarly, more than 26 percent of all independent travelers (those not associated with a convention, group or business meeting) who stayed at Park Place casino resorts in Las Vegas in the first nine months of 2003 booked their rooms through Park Place Web sites. That was up from 18 percent in the first nine months of 2002.

By comparison, MGM Mirage is booking 16 percent to 17 percent of its total reservations online, said Bill Hornbuckle, executive vice president of MGM Mirage.

In October, the company streamlined its online Web sites to increase business by providing room-booking capabilities on fewer pages than was previously possible. To date this year, online bookings are up 45 percent compared with 2002, Hornbuckle said.

MGM Mirage conducted a feasibility study in 2002 to determine what customers liked and disliked in booking engines and found simplicity and speed ranked highest.

MGM Mirage, therefore, designed its new system to eliminate the need to click through numerous pages to select rooms and rates, allowing travelers to make advance room reservations at 10 MGM Mirage properties in Nevada and Mississippi with more than 21,000 rooms.

"Because we've consolidated the room-booking process to fewer pages, it's never been easier to make online reservations at our properties," Hornbuckle said.

Separately, Harrah's Entertainment announced plans Wednesday to launch an online gaming site called Lucky Me in early 2004.

Harrah's online casino, which will initially be available only in the United Kingdom, will operate under a subscription model, rather than the "pay as you play" model offered by most gaming sites.

UBS Warburg analyst Robin Farley, however, reminded investors in an advisory that similar online gaming sites by MGM Mirage and Kerzner International closed earlier this year.

The sites had been operating at losses and the companies expressed doubts about the prospects for profitability of highly regulated online gaming operations.

Despite having a strong casino brand, the cost of running highly regulated sites put MGM and Kerzner at a competitive disadvantage to the vast majority of Internet gaming states that are not strictly regulated, she said, expressing skepticism about Harrah's new venture.

Richard Mirman, Harrah's senior vice president of new business development, said Harrah's teamed up with Revahertz Networks, a privately held Boston-based software game developer, to develop and market its new Internet games.

He expects Harrah's to succeed where others have failed because the games will be subscription based, as have other programs that have succeeded on the Internet by attracting added classes of customers.

"The subscription nature plus the multi-channel distribution opens up the universe of people who will be interested way beyond die-hard casino players," Mirman said.

Casino Giants Take Different Online Approach is republished from