Two Way Hard Three | Las Vegas Casino & Design Blog

January 10, 2012

The Property Host

Posted by Hunter

Between gambling, food, booze and rooms, I spend a lot of money in Vegas casinos every year and yet I've never had a host that I could call to reward me for my loyalty. As a result, I haven't been shown much... and hey, as a 'journologger' (love making up terms), maybe I shouldn't be seeking that out anyway. I'm not too worried about myself but I definitely see a weakness here. Lets look more closely.

Over the past decade and especially since the Great Recession, we've seen some of the historical institutions of the casino industry remake themselves. These days, gaming revenue makes up only 39% of the average total, a shift from 15 years ago when it was closer to 58%.

What should be the next sacred cow to fall? The casino host.

Ok, maybe 'fall' is not the right way to look at it - how about transform instead? There was a time when the goal of these sales-oriented-sometimes-mercenary employees was simply to get you on property to sit at a slot machine or hit a dice table, plied by free drinks and a couple of comps to the coffee shop. At this point, that's old-style thinking.

Capturing every ounce of revenue from both gaming and non-casino operations should be the goal of every property GM or president. Why is it then that loyalty programs are still mostly gambling centric? How about a new class of 'property hosts', rewarding recurring visitors, not just to the penny slots but to the suites as well? The current system is a relic of a previous age.

Along with revenue diversification should come promotional and loyalty diversitifaction as well. We've seen some of that with new programs designed to highlight the 'leisure spend' dollar - but not nearly enough. Plus, they still charge for crappy Wi-Fi that barely works (no, I'm not gonna stop bitching about that).

Sure, Las Vegas casinos will always need a few high-end hosts to take care of the big players but there's a whole new and emerging market of customers who want to be taken care of for just spending money on stuff outside of the casino: Rooms. Suites. Shows. Clubs. Food. Retail. Better food. Golf.

Free tip: Care about these people, even if they don't gamble. You'll make more money.

If I spend $1,800 on a couple of nights in a suite, why is that worth less than dropping the same amount on Wheel of Fourtune? Sure, you had to pay a housekeeper to clean the room but the marginal cost there is negligable (or at least that's what they taught me in college). Sure, casino dollars may drop fastest to the bottom line but this a newly competitive economy. Money is money is money.

Now, there are definitely properties that have been working to moderninze along these lines, even if they still use the older nomenclature of 'casino host'. The Cosmopolitan, Las Vegas Sands (Venetian & Palazzo) and to some degree Caesars' Total Rewards and MGM, among others, have all started to credit for some non-casino spend.

Great but not enough. Looking at overall spend should be the standard, not a 'revolutionary practice' or half-measure.

This is not new ground to cover. Some Vegas casinos have affiliations with national hotel brands that have this mastered and in some cases allow customers to spend those points in Clark County. Learn from them!!

The traditional marketing strategy of casino-centric hosts is outdated. The sooner it is replaced by something that captures and rewards every dollar coming into the city, the better off the Strip operators will be, serving happier and more loyal customers.


Read archived comments (9 so far)
January 10, 2012 5:42 AM Posted by Mike E

Hosting for this market does not work. Recognizing loyalty, however, does.

While yes, there has been a promising trend in big hotel spenders getting some kind of attention, the idea of hosting such a person is contrary to a host's actual duties.

In the extreme sense, being hosted assumes your personal, go-to guy to take care of everything, most of which will be on the house. His clients pay only tips and perhaps some retail. Therefore, a host is not beneficial to the luxury, non-gaming traveler who is already happily paying for everything. That is to say, I wouldn't mind the services of a host (and who wouldn't turn down a freebie here or there?), but it just doesn't make sense from the financial standpoint of the casino if he tosses me a free dinner at Society when I'll more than likely spend the evening at SW on my own dime.

On a more positive note, luxury travelers are, at the very least, receiving increased status - a service that costs nothing to the casino but will be priceless in developing loyalty. By spending only $3000 per year at MGM resorts, you gain Gold status. That doesn't even include your gambling. That means you've got early/late check-in, automatic room upgrades, no lines at any casual eatery, priority fine dining reservations, no lines/covers in nightclubs, show upgrades, etc. at over half the places on the strip.

I've been a proponent of this for years and when Wynncore inevitably adopts it, I'll most definitely be stepping down from my soapbox.

January 10, 2012 8:54 AM Posted by Hunter

Some great points Mike.

I think what I'm imagining in my head is closer to the loyalty/recognition programs you describe - I just want it to be an industry standard or even better, something that is used as a point of competition.

January 10, 2012 10:20 AM Posted by detroit1051

I don't agree that the casino host is "old-style thinking." Even though the gaming revenue percentage has dropped 33% since 1984, it is the most controllable revenue source for casinos. If the old saying is true that 20% of the gamblers account for 80% of the revenue, it's very important that hosts grease the skids for these players and, as Mike E wrote, be the go-to guy for these players.

On the other hand, room, food and beverage revenue all have lower margins than gaming and are very sensitive to inflation and the economy. Room, food and beverage revenue percentages have increased, respectively, 45%, 33% and 11.5% since 1984. These increases are important, but I don't believe there is a lot of cushion. Overall spending needs to be recognized by exceptional personal service and some sort of loyalty recognition, but hosts may not be the answer.

When I visited MGM Grand Detroit last summer, I became a member (no cost) of the MGM Grand Detroit Rewards program, separate from M life. Meals at Michael Mina's SaltWater and Bourbon Steak, Wolfgang Puck's and the Spa all give me points toward cash certificates. If I'm going to eat there anyway, it's nice to receive something. I assume similar programs are in place in Las Vegas.
Fun topic!

January 10, 2012 10:36 AM Posted by parchedearth

Hosts are only practical for high rollers who want suites and villas. Hosts that walked the pits handing out buffet coupons are a thing of the past.

The main perks I am looking for are the ability to search and book comped or heavily discounted suites online, and to have any earned comps automatically deducted from my bill. Whereas, hosts require me to call ahead, negotiate for dates and room type, play at minimum betting limits for certain periods of time, and check with them before leaving. I have no interest in doing any of that.

Just received a mailing describing new changes to Mlife points and perks. Mlife now gives 25 points per dollar spent on room, entertainment, and meals. This is a huge win for me that will easily boost my points by a factor of 5 and guarantee gold (or higher) status every year. Also, Cosmo gives 10 points/dollar of spend. In theory, several of the other players clubs give points for spend but I have never seen firm numbers.

January 10, 2012 2:22 PM Posted by sbpewsaw

Great topic Hunter,

I too think that loyalty is something that is very difficult for bean counters to quantify, and is thus written off for the short sighted goal of maximizing profits in the short term. Like you said, money is money is money so resorts should be tracking dining, retail, hotel, etc. because it guarantees repeat business, which hopefully leads to brand loyalty. One of the reasons I've visited Cosmo so frequently (aside from the awesome public spaces and central strip location) has been because I earn points there for everything i do - not just casino play. I certainly hope that the other resorts continue to wise up and reward people who don't necessarily gamble a lot, but come to Vegas often anyway.

@mikeE - I too would like to see Wynncore adopt a more favorable rewards program!

January 10, 2012 7:52 PM Posted by bigdaddyj

What you're really looking for is what luxury chains like Four Seasons & Ritz-Carlton have known & offered their repeat customers for years, but that Vegas casino-hotels have a reputation for lacking anymore, and that is customer service. While the type of individual coddling lavished upon high-rollers is necessary to retain their business and ensure their gambling dollars keep coming in the door, it is impractical to provide that level of service to everyone who walks through the door at a 3,000+ room mega-resort. That is why the players clubs have blossomed over the years, to try and replace what the old-school casino operators/mafia guys could offer everyone who walked through the door when places like the Sands, Stardust or Desert Inn only had a few hundred rooms (which, coincidentally, is the same size of most "5-star/5-diamond" hotels everywhere else besides Vegas), so the only way to provide highly-personalized service to the masses is through a rewards club. And I agree, that should be expanded to offer some type of reward to the frequent visitor who spends a lot, though as Mike E pointed out, what's the point of a free dinner for someone who is already gladly paying for that dinner anyway. But as for the big players, the personal service, (perceived) freebies and the coddling that comes with a casino host relationship is essential to convincing those players that they are getting something in return for their gambling dollars that strokes their ego and makes the kind of person who can already afford whatever they want whenever they want it feel they are getting something they can get nowhere else when the come & gamble in Vegas. So the hosts will never go away for the biggest players, nor should they. But are you really looking for rewards for your non-gaming spend, or better customer service? If it is the former, I think the casinos are starting to provide that as they expand the players clubs to incorporate some form of rewards for non-gaming spend. But I think the latter is also being addressed also, with the hotel-within-a-hotel concept that started with Wynn Tower Suites & Skylofts, continues with Skysuites at Aria & the soon to be opened Nobu hotel at Caesars, etc. Because the bottom line is, a 3,000+ room hotel cannot truly provide 5-star service to everyone who walks through the door, but maybe a 300-suite boutique hotel within that huge resort can. So perhaps the answer is to provide frequent albeit non-gaming customers with free upgrades to the "boutique" section of the resort (the same as already occurs with premium albeit non-whale gamblers), so at the very least they can start to appreciate a more Four Seasons/Ritz-Carlton-esque level of customer service, even if not one as personal as the one provided via casino hosts to the biggest gamblers?

January 12, 2012 4:20 PM Posted by Funkhouser

Even with gaming revenues as whole representing a lower portion of total revenue. I still think it is weighted higher across specific age segments and visitors. EG I believe more visitors to properties will spend $$ to take a risk at gambling rather then spend on items they don't see value in. So if a properties demographic is toward a certain age segment it makes perfect sense that certain resort spend would be higher in categories. The on property nightclub growth is an example of this. However I question the sustanibility of this over the next few decades. I believe the real reason revenue growth in gaming has declined is the increased competition outside of vegas. The host or preferential marketing offers I receive for my gaming loyalty is defenitely my continued draw to a property. Otherwise there are other luxury destinations I can visit with a higher level of service.

January 22, 2012 5:24 PM Posted by Marc

I think evolution is the right way to think about it. Vegas has had independent VIP hosts that focus on clubs for years. The natural progression is to bring that idea and service for the non-gambler in house for those that spend money on other stuff.

The new host won't likely be comping the way a casino host would, but they will be there to make sure the person spending money has everything they want.

February 11, 2012 2:30 PM Posted by Matt

Great topic!
I visit Vegas six times a year or so...5 weekends and a week in June for the WSOP. Other than an occasional mailer, I am basically ignored. What incentive do I have other than price comparison when making my purchasing decision? For instance...I play the Golden Nugget daily tourneys...usually entering 6 during a weekend....paying 600 dollars or so. The Nugget doesn't track daily tourneys on their rewards card, nor do they give credit for a Carson Tower room stay. To your well made point, without seeking to capitalize on the money spent on hotel rooms, food and beverage in the hotel I am staying at...shows, etc...they are leaving money on the table. By adding those activities to a rewards program, it engenders loyalty. Instituting an automatic freebie based on dollars spent is easy and requires no more payroll. A large number of low rollers equals profit. Knowing that there is no reward for staying or eating, or going to see Gordie Brown, why would I pay the extra dollars to stay at the Nugget? I can stay somewhere else downtown and base my spending only on price and value. I used to stay only at the Nugget, but last year stayed at 5 different the question remains....who wants my business and who is smart enough to design a program to create a relationship between their biz and me?