Casino markets vary greatly, and Las Vegas is in a league of its own.
Las Vegas, the king of casino markets, stands out as both an anomaly and a leader. Unlike many casino markets, it is unique due to the multiple identities within the market. Its leadership role is not optional, Vegas simply must lead, hence its nickname – Sin City.
Las Vegas is a unicorn
Unlike most casino markets that have a single customer base, Las Vegas targets and attracts a vibrant mix of different demographics.
Casinos in Las Vegas, geared towards residents, serve as much as all-ages hangouts—complete with bowling alleys and movie theaters—as they do gambling hubs.
Casinos located in Downtown Las Vegas like The D cater to a diverse crowd of both locals and tourists. These smaller casinos primarily aim to offer an excellent gaming environment for a wide range of visitors.
The latest visitor profile from the Las Vegas Convention and Visitors Authority reveals that approximately 58 percent of visitors to Las Vegas explore downtown for its sights, sounds, and casinos.
Next, there’s the Las Vegas Strip, differing significantly from other casino regions in Nevada and globally. Many tourists perceive the Strip as both the beginning and end of Las Vegas. This area mainly caters to visitors worldwide, and this diverse clientele creates a distinct casino market.
Every casino market isn’t attracting hordes of tourists. Casinos on The Strip are frequented by high rollers from Asia and overseas, tourists from across the US, and regional visitors seeking a brief escape from home.
Every group of visitors has unique demands, and the casinos on the Strip strive to cater to everyone’s needs.
Las Vegas Strip is more than gambling
For many years now, the Las Vegas Strip has been about more than just gambling. For over three decades, non-gaming revenue has exceeded that of gaming revenue.
The goal of the Strip casinos is to earn roughly 30 percent of their revenue from gaming and 70 percent from non-gaming activities. However, the 2017 Nevada Gaming Abstract revealed that gaming revenue made up slightly more than 40 percent of their earnings last year.
Casinos remain predominantly places to gamble, with gaming revenue being significantly important nationwide. The heightened competition from national casinos could have prompted those on the Las Vegas Strip to provide distinctive experiences.
Casinos on the Vegas Strip offer a combination of restaurants, entertainment, nightclubs, bars, shopping, and other amenities that are not commonly found in many other casinos across the US.
The typical vacation in Vegas lasts a little over two days, which prompts visitors to cram in as many activities as possible. Even though 74% of tourists admit to gambling, 77% of them only dedicate two hours or less to this activity. This leaves ample time for them to experience everything else that Las Vegas has to offer. It’s been a while since a trip to a casino resort on the Strip was solely about gambling.
Generating profit
Most of the casino operators on the Las Vegas Strip are public companies, which necessitates them to report their earnings to shareholders every quarter. A continuous increase in profits is required to maintain the company’s value, otherwise, it decreases.
The corporations have been introducing fees and reducing costs to increase profits for their shareholders. Hiking up base prices may deter some individuals, but incorporating fees maintains the perceived low prices, thus creating an illusion of low expenses.
Visitors have not appreciated the fees, but until recently they’ve merely grumbled quietly. The accumulated costs result in unexpected prices, and it’s possible that the casinos have reached the limit of how much they can pressure some of their customers.
Leisure versus business travel
Vacationers in Las Vegas have openly expressed their dislike for all the fees. However, this doesn’t appear to concern the operators of the Strip casinos, who have been anticipating this reaction.
In 2015, the Profit Growth Plan was implemented by MGM Resorts International.
This strategy was devised to simplify costs while boosting income sources. Caesars Entertainment has adopted a similar, though less publicized, method to enhance profits since the company’s emergence from bankruptcy.
MGM Resorts International disclosed in late 2015 that they were shutting down the Cirque Du Soleil show Zarkana at Aria. The theater was replaced earlier this year with new convention and meeting space, which proved to be a more lucrative utilization of the property.
MGM Resorts has also inaugurated new meeting space at Park MGM (previously known as Monte Carlo) and Luxor. In the coming year, additional convention space will be opened at MGM Grand.
MGM Resorts is not the only organization expanding their convention space. The Las Vegas Convention Center is also undergoing expansion, while Caesars Entertainment and Wynn Las Vegas are constructing new convention centers.
Visitors attending conventions and meetings in Las Vegas generally spend more money. It has been observed that business travelers with expense accounts tend to spend almost 50 percent more than those without such accounts.
Theoretically, the revenue from two convention and meeting guests in a casino can replace that of three leisure travelers.
There is now a struggle to make the Strip a place suitable for all.
Make everyone happy
Casino corporations aim to maximize revenue from both tourists and business travelers visiting the Las Vegas Strip, each having different budgets.
It appears they’ve maximized the fees. However, only one of the two customer types is genuinely concerned about the additional charges.
Travelers on vacation are consistently mindful of costs as they are utilizing their well-deserved income. On the other hand, individuals traveling for business are not as worried about the prices, provided they are similar to those in other potential host cities for their events.
Casino operators are addressing this disparity by presenting promotions and discounts to leisure travelers. Earlier this year, they initiated promotions that eliminate fees and provide discounts for loyalty club members.
Caesars Entertainment is experiencing a substantial surge in hotel room bookings in the fourth quarter alone. There was a noteworthy rise in gaming revenue on the Vegas Strip last month, which could be a coincidence or not.
For the foreseeable future, the best way for Vegas Strip casino operators to maximize revenue may be to discount leisure travel while maintaining fees for business travel.
In the new year, we should anticipate an increase in promotions from Las Vegas casinos as casino operators aim to boost visitation and generate higher revenue.