Gaming Review and Outlook: Disbelief, Trepidation and Hope

Note:  Following is an article I wrote for Infinity Gaming Magazine.  It appeared in the  December 2011 issue.

As 2011 quickly comes to a close, I look back on the gaming industry with disbelief.  I peer forward to 2012 with both trepidation and hope.

This year has been an interesting one at best for casinos because they are no longer recession proof and insulted from the world at large.  Casinos were affected by:  unemployment in the U.S. holding near 9 percent, gold trading at more than $1,600 an ounce and the economic crises in Greece and Italy.  And how could anyone forget the Arab Spring and general world unrest?

Even so, it’s astonishing that 2011 has not been a bad year for gaming.  Many operators smartened up.  They worked hard to reach the proper staffing levels without making huge cuts.  They developed projects that fit their market’s demand without clinging to the old mentality of “build it and they will come.”  They finally understood that pouring billions into construction of glitzy new buildings is no longer the answer to a decline in customers.

Narrowing my focus, I have to say 2011 was an up-and-down year for Nevada gaming.  There were a few months that were great but then the numbers dropped off.  For the second quarter, the Wall Street Journal reported that “the Las Vegas Strip’s dominant casinos and resorts are signaling that after years in the dumps, the heart of Las Vegas tourism is showing a slow recovery,” with Caesars’ Las Vegas revenues increasing 10.3 percent from the year-earlier period and spending per trip growing 9.2 percent.  Then in November, the Las Vegas Review-Journal reported that Nevada casinos saw their take from customers decline almost 6 percent in September to $863.9 million, the second consecutive monthly revenue drop.  With increased competition coming from across the U.S. and the rest of the globe, it has not been an easy year for Las Vegas.

I believe 2011 has been a once-in-a-lifetime year for gaming.  In some respects, perhaps it’s okay that many of us may never see such a year again in our lives.  But it hasn’t been all bad.

As I look forward to 2012, I have significant concerns but also optimism.  First the concerns.

Forrester Research,  an independent research company that provides forward-thinking advice to global leaders in business, states that we have entered the “age of the customer” and that “empowered buyers demand a new level of obsession.”  WOW!  Forrester is looking beyond better service or customer focus.  It’s saying customers will demand even more.  They will expect obsession.

And I think this could be true.  Customers have access to more information than ever before.  They have the gargantuan amount of information available on the Internet, but they also have something even more powerful – social media commentary.  From blogs to Yelp to Facebook to TripAdvisor, customers are well aware of what casinos are doing to lure them and they are reading about what does and doesn’t work. 

Casino guests believe advertising less than ever and online customer comments more than ever.  This is revolutionary because social media empowers customers like nothing that came before it.  Social media is 24/7 in real time.  Imagine a player posting his own Yelp review about your property while he is still on the casino floor.  That is customer feedback gone real time!

This means that in tough economic times, the customer holds all the aces.  Customers decide who they will reward with their entertainment dollars.  Forrester is right.  Casino operators must now obsess over their guests.  For years, casinos have paid lip service to customer service, being customer centric and improving the guest’s gaming experience.  Those that have taken action and invested in customer-related improvements over the last three to five years will be rewarded.  Those that just talked about it may not survive.

As if that wasn’t enough, there’s also a new kind of competition emerging from our economic ruins.  With sales tax and property tax revenues plunging in the U.S., states need new revenue streams for schools and social services.  Sin taxes are an easy target.  Almost daily, I receive emails about state legislatures looking at ways to implement gaming taxes or increase the casino tax revenues they already receive. 

The day I wrote this column, my inbox had news about Kentucky looking at taxing casinos.  Casinos that dot the Indiana-and-Kentucky state line better get ready now if they want to survive.  Florida is looking at mega casinos.  What will that do to the Biloxi area?  Will Texas decide to dip into casino revenues in 2012?  It doesn’t matter whether a casino is in the U.S. or Europe.  Government coffers everywhere need replenishing.  And let’s not forget about online gaming.  If Internet-based gaming becomes legal in the U.S., will states tax it?

I’ve dwelled enough on the dark side.  Now I want to say something positive.  There will be opportunities for gaming in 2012. 

Creative ideas often bubble up during tough times as people look for better ways of doing things.  In 2012, I think casinos will become more creative.  Because they know they all have the same games and tables, they understand that they have to be creative to stand out and attract guests. They will look for ways to get players to visit more than once.  Only time will tell what they do, but they will do it because they must.  Customers may not have as much to spend these days, but that’s okay if they have fun and come back.

I believe 2012 will be an amazing year for the industry.  Casinos that are customer focused and meet or exceed customer expectations (in other words, customer obsessed) will have a good year.  Please note I did not say an easy year.  I don’t think it will be easy for most casinos.

Wishing you and your team an amazing 2012 full of opportunities, success and fun!

To read other articles by Martin Baird, go to www.casinocustomerservice.com/post.htm

Martin R. Baird
Robinson & Associates, Inc.
mbaird@casinocustomerservice.com
www.casinocustomerservice.com
www.advocatedevelopmentsystem.com
208-991-2037

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