Andrew Klebanow, principal at Klebanow Consulting, discusses how COVID-19 has seen US casinos modify their marketing strategy, with many operators achieving substantially higher net income on lower business volumes. However, while for some operators, valuable lessons have been learned during the pandemic, with the rise in vaccinations across the country, others are reverting to old habits.
While casinos in Canada are only now beginning to re-open after a sixteen month hiatus, casinos in the United States have continued to operate through most of the pandemic, albeit with a host of restrictions. With nearly 60 percent of the US population now having received at least one vaccination dose and 50 percent fully vaccinated, casino regulators and state health departments are now lifting restrictions on occupancy, mask mandates, and other safety protocols. Customers in turn are flocking back to their favorite gaming venues. In many jurisdictions business has returned to normal and certain markets are now experiencing record wagering volume.
The pandemic had forced US casino operators to abandon most marketing programmes in order to limit capacity. Large scale drawing drum promotions were suspended, buffets were closed, bingo halls and poker rooms were shut, and the volume of mass market mailings were reduced. The net result was that many operators enjoyed substantially higher net income on less business volume.
One question that many gaming analysts asked was would operators return to their old habits and spend inordinate amounts of money on attracting marginally profitable customers, or would they maintain marketing discipline and focus their attention on their most profitable gamers. A recent survey of casinos across the US revealed that while some properties intend to proceed cautiously, others are returning to old habits, turning up the volume of promotions to pre-pandemic levels and re-opening marginally profitable operations.
MAIL OFFERS ARE BACK
It may come as a surprise to many operators in Europe and Asia that US casinos still use postal mail to communicate with their loyal customers. While some casinos have deployed mobile apps, email communications, and links to their websites to deliver offers to their customers in the wake of the pandemic, most operators are back in the business of licking stamps, and some are spending those marketing dollars irrationally. A visit to a casino in New York last winter during the height of the pandemic by this resident of Nevada who cycled $50 through a slot machine not only generated a series of follow up emails, but also triggered the mailing of a four-color mailer detailing upcoming spring promotions. 2,280 miles would seem like a long way to travel for someone to redeem a $10 free play offer.
Station Casinos, Nevada’s largest operator of casinos that serve local residents, re-started their mass market mailings in the spring. A succession of monthly mailers advertise discounted menu items in their restaurants, bingo promotions, and include five dollar free play and five dollar dining coupons for those in the lowest tiers of their database.
TRENDS IN CASINO BUFFETS
The pandemic required casinos across the country to close their buffets. While buffets had long served as a tool to attract customers, they were also notoriously expensive to operate. What many casino operators discovered was that, with their buffets closed, food & beverage profitability soared. Most casinos have yet to restart their buffets and many operators are seriously evaluating re-purposing them into other dining concepts.
Customers whose primary reason to visit a casino is to gamble have returned despite buffets being closed, and this strategy has positively impacted the bottom line. In fact, the CEO of Caesars Entertainment, the largest operator of casinos in the United States, stated in a recent earnings call that he doubted if most of the company’s buffets would return after the pandemic receded. Other operators have taken a similar stance.
One market that appears to be bucking this trend is Las Vegas. With all restrictions on capacity lifted, tourists are returning to Southern Nevada, and casino operators are re-opening non-gaming amenities to better serve them. Wynn Resorts announced it is reopening its buffet with prices ranging from $38.99 to $64.99. Despite the aforementioned statements by the company’s CEO, Caesars Palace re-opened its Bacchanal Buffet in May after a multi-million dollar renovation with prices now peaking on weekends at $57.99. The buffet at the Cosmopolitan is also scheduled to re-open soon. Expect others to follow suit.
LAS VEGAS LEADING THE WAY
The casinos in Las Vegas are now fully re-open and restaurants, showrooms and theatres are expected to be back in full operation by mid-summer. Cirque du Soleil announced plans to restart their production shows beginning with Mystere at Treasure Island.
McCarran International Airport reported that the facility handled 3.5 million people in May of 2021, an increase of 600,000 from April. While still 23 percent below May of 2019, it is a sign that visitation is accelerating. The only segments that have yet to return are international visitors and the all-important convention segment. Regardless, for domestic tourists visiting Las Vegas, masks are off, plexiglass dividers are gone, and the smoking lamp is lit.
Local Las Vegas casino operators have also ramped up their marketing efforts, with steady increases in promotions and advertising spending. Recently, Station Casinos launched a new television campaign. Commercials display a montage of videos, starting with aerial shots of the company’s various properties, then interior shots of its restaurants, appetising menu items, casino games, smiling employees and happy customers. Playing throughout the commercial is the 1970’s rock anthem, “It’s All Right Now”. The message is clear: it is safe to venture back out and enjoy what casinos have to offer.
As constraints on capacity and mask mandates are lifted in other markets, a resumption of promotional spending to pre-pandemic levels is expected. For some operators, valuable lessons have been learned. For many others, they have not.
