In the mid-1990s, a seismic shift felt around the gaming world occurred in the largest of casino markets.

Casino games and all the various forms of betting were no longer the only or even the main moneymakers for Las Vegas. Non-gaming revenues had grown to account for an even bigger portion of the business. Although the current economic downturn makes revenue comparisons difficult, the split of gaming versus non-gaming continues to be in the 50/50 range, and this ratio is repeated in gaming locales far beyond the famous Strip.

While the revenue split may be more critical in Las Vegas and other major destination casinos, rooms, dining and entertainment, which started as loss leaders, are now key pockets of profit apart from the casino floor. Exploiting this non-gaming side of the business may provide the latest path to more business, new customers and increased success for casinos even as economic factors continue to affect the gaming industry.

This New Dimension To Gaming
Las Vegas changed from merely the place to bet to a destination of full-scale resorts when pressed to continue to attract customers as new markets opened and gaming competitors burgeoned all across the country. Perhaps this can be dated back to 1989 when the Mirage launched with an exploding volcano and white tiger attractions, or to 1990 when the Rio debuted as the first "all-suites" hotel, or even to 1992 when Wolfgang Puck opened a fine dining experience with Spago in the Forum Shops at Caesars Palace.

Regardless of exact date or event, Las Vegas would lead the way and set a new standard for the gaming world with an increasing array and dazzling diversity of amenities from luxury suites to fine dining, from world-class shopping to pampering spas, and from clubs and bars to must-see attractions and live events.

And it wasn't long before actual revenues would reflect that these alternative places to spend money were expanding the casino beyond the fun and excitement of gaming.

Yet even as the revenue mix changed, the main focus of casinos would remain on the customer who gambled. In 2000, Harrah's, recognized as the first to bring a loyalty and frequency marketing program to the casino world, would instigate a wave of similar programs to recognize and reward the gaming customer. Since then, major efforts and programs have been centered on the casino patron and used to identify, track and reward those who gamble. Player tracking and cards are now the norm for casinos all across the country and into many corners of the gaming world.

Until recently, non-gaming activity was considered ancillary and not a separate entity worthy of the same pinpoint tracking and marketing focus as casino action. This was even as others, including the American Gaming Association in its 2009 "State of the States" report, would continue to detail the growth of non-gaming activity. As in previous surveys, it reported that during casino visits more than 75 percent of customers ate at a fine dining restaurant, more than half saw a show, concert or other live entertainment and almost half also visited a bar or nightclub.

Today, casinos are turning the technological equivalent of searchlights on spotting non-gaming activity by their already identified gaming patrons. Gaming analysts are being tasked to develop 360-degree views of customers that include hospitality spending along with casino play.

A more difficult task is presented by guests who may come to a casino regularly not to gamble but rather to pay for a palatial suite, partake of world class dining, relax in style with spa treatments and special cabana pool service, be among the celebrities who attend the latest concerts or entertainment and shop 'til they drop-and who are unlikely to generate much attention from management. Not spending much time or money on the gaming floor means what one frequent visitor to casinos, albeit a non-gamer, voiced as "I am invisible."

Accounting for this focus on non-gaming, which has come later rather than earlier, and even hindering any previous efforts, has been a world of different challenges presented with this segment of the business. To start, there is a major hurdle in how to identify revenue by patron from a multitude and disparity of current systems employed by the various departments to run the hotels, restaurants, events and more. Even more challenging is how to assess the worth or value of the various activities based on diverse margins and profitability.
    

Making the Invisible Visible
In a recent survey, many casinos are turning their traditional player/gaming loyalty cards into vastly expanded programs. Others are exploring or implementing a variety of vehicles and programs in concerted efforts to track the various on-site doings of their guests. Additionally, several companies with expertise in tracking and analyzing are coming to their aid.

The Venetian
When they "eat, sleep, shop and play," customers earn recognition at the Venetian, the luxury resort, casino and convention destination in Las Vegas and the first among the growing group of integrated properties developed by the Las Vegas Sands Corp.

Guests can earn points when they charge purchases back to their suite at either the Venetian or its next door neighbor, the Palazzo, both of which present five-diamond and four-star offerings including suites, restaurants, nightclubs, shows, shops and spas. Included in the program are restaurant meals, show tickets, spa services, nightclub drinks, shop purchases, suite rates and in-suite charges-even movies or Internet expenses.

The points are then credited to the guest account and can add up to an upgraded status from basic Grazie to Gold and up to Platinum status. In return, guests at the various levels are rewarded with a variety of special treatment or services, from automatic upgrades and discounts to a full range of complimentary services.

In recent reports, Rom Hendler, vice president of strategic marketing at the Venetian, has detailed how the data on customer intelligence is combined with revenue management. By looking at a customer's past stays, activity on the casino floor and purchases in other parts of the hotel, the property creates a forecast. "It predicts the value the customer will have at their NEXT trip," describes Hendler.

By aligning all factors with marketing and revenue management, the organization is staying steady in these lean times, reports Hendler. Since the economic slowdown began last fall, the company has aggressively worked its data to market to the right customer at the right price at the right time. "We continue to look for new opportunities within our database," summarizes Hendler.

Harrah's Entertainment
Just over a year ago, Harrah's Entertainment, Inc. which not only operates in the gaming destinations of Las Vegas and Atlantic City but elsewhere, launched the latest enhancement to its Total Rewards customer loyalty program, giving its members the ability to earn reward credits and tier credits for nearly all of their entertainment expenditures, including dining, live entertainment, golf, spa and retail purchases.

Long recognized as one of the industry's first frequency marketing programs and for its continued innovation, this most recent augmentation allows guests to be tracked and rewarded for both gaming and non-gaming activities by using their Total Rewards card.

When the program was announced, David Norton, senior vice president and chief marketing officer for Harrah's, explained, "It's a natural evolution that incorporates the growing number of entertainment offerings and appeals to gamers and non-gamers alike."

According to Norton, the program is intended to provide a more "holistic" understanding of their customer.

To earn credits, Total Rewards members present their Total Rewards card at the point of purchase or charge to their hotel room folio. Guests staying at most of the 40 Harrah's-operated casinos can earn one credit for each dollar spent, adding to their balance that is earned through gaming activity. As explained by Norton, "It's all one bucket."

At the same time, Norton said that now there is tremendous detail on their patrons' activities. The goal is to use the information so the company can be more relevant in both face-to-face interactions and on-going customer communications.

Foxwoods
Operated by the Mashantucket Pequot Tribal Nation, Foxwoods lays claim to being the largest casino in North America with a massive complex and more than 40,000 guests each day. All amenities expected in Las Vegas or luxury resorts are found and even mega-sized here with six different casino venues, more than 30 restaurants, five entertainment venues, shops, championship golf, spa and meeting spaces. In 2008, the MGM Grand at Foxwoods debuted, adding even more luxury rooms, spa, dining, retail and gaming.

Foxwoods' senior vice president of consumer marketing, Robert Victoria, explains the property's full-scale thrust into analyzing non-gaming.

"Tracking gaming customers is much easier than tracking a non-gaming, or a client that frequents your property, spends money but does not gamble," Victoria states. "It is very important, however, to track all revenue no matter what the source."

In an example, Victoria outlines how a couple may come to Foxwoods, purchase two $35 tickets to Stevie Wonder, enjoy a gourmet meal at the AAA four diamond restaurant, Paragon, and spend another $80 and then purchase a hotel room at one of the AAA four diamond hotels for $100. This couple eventually spends $215 while on their campus.

"If the same couple came in and spent $215 on one of our 350 table games and lost it all, in theory, they are worth about the same to the enterprise," explains Victoria. "Therefore it is extremely critical to measure all gaming and non-gaming revenue, from golf to roulette."

Victoria explains that Foxwoods is committed to tracking track the loyalty and "generous patronage" of all of its visitors.

"We want to reward each guest and ensure that they have a fantastic experience and, just as importantly, receive a higher than average value for their hard earned money," he describes. "To that end, it is our goal to track each valued customer and offer them compelling reasons to remain loyal to the first class Foxwoods brand."

Supporting Technologies and Strategies
In the quest to maximize gaming and now non-gaming revenue and operations, various companies and consultants have been called upon or have taken on the task of capturing and analyzing the multi-dimensional aspects of a casino and their patrons. A few of the different efforts and varying approaches are outlined below.

Bally Technologies
"Tracking gaming and non-gaming is not a new concept and many are doing this to one degree or another and have been for years, but the level of implementation and sophistication of usage varies widely by market and casino operator," explains Bruce Rowe, senior vice president of strategy and business development for Bally Technologies.

Rowe is a veteran gaming executive who has worked both on the operations side of gaming with Harrah's and on the supplier side, now with Bally Technologies. The company is a longtime leader in slots, video machines and casino management systems for the global gaming industry, and recently introduced Bally's Business Intelligence (BI). BI is designed to improve understanding of casino operations with a suite of tools for data analysis, visualization and campaign management.

"Several of our casino management systems regularly import data from systems like hotel and food and beverage, but Bally BI is where we capture root data from multiple source systems to create the multi-dimensional view of the customer's behavior and spend," explains Rowe. "Our CMS player tracking and marketing products use transaction based information for creating deeper views of customer behavior, but the BI tool is where detailed transaction data is stored and analyzed over longer periods of time and used to answer more complex and multi-dimensional business questions."

As for the challenge of assessing value and worth for non-gaming, Rowe believes that this has evolved over time and will continue to do so. "The focus was first on hotel, then food and beverage, then entertainment, and now retail," cites Rowe. "Metrics will vary widely by market, and while Las Vegas represents the most complex of the markets from the standpoint of scale and complexity, the same issues either do not exist or exist to the same scale in most other markets.

"At the same time, we are sure that the integration of peer-to-peer computing and tools like the Bally Integration Gateway will make it much easier to use sophisticated tools to get a multi-dimension view of customer behavior and spend and to implement Revenue of Codependent Inventory methodologies."

Rowe summarizes that "from the customer perspective it is important to understand where they spend their time and money and how that determines their enterprise value versus gaming value alone."

SAS
More than 60 casino properties have turned to SAS, a leader in business analytics software and services, for the technology and analytics to make smarter decisions. A specific gaming industry offering, SAS for Patron Value Optimization (PVO) was introduced back in the fall of 2006 with the Hard Rock Resort and Casino in Las Vegas as an early customer.

According to Suzanne Clayton, a 12-year veteran at SAS who was involved with bringing PVO to the gaming industry, this tool is being used by a number of casinos to provide a critical 360-degree customer view. With annual software enhancements, it's a solution that combines data quality, predictive modeling, campaign management and reporting capabilities and has been utilized by casinos to fill their hotels and casino floors with high-value guests.

"Casino operators are adopting technology-enabled strategies such as PVO to enhance the overall customer experience and enable smarter marketing," explains Clayton. "To be fully effective, these strategies have to include robust data quality, data integration with a clear view of patron behavior and predictive analytics."

Gaming operations use SAS's PVO to capture highly detailed data from a multitude of departments within the casino-including the hotel, spa, retail outlets, call center, ticketing, food and beverage-to gain a more sophisticated and detailed profile of their clients.

"Then SAS works with each casino customer to create the analytic models that they need to make insights 'actionable,'" states Clayton.        

Various analytical capabilities are encompassed within the SAS for Patron Value Optimization solution and provide analytical profiling, segmentation, metrics and predictive modeling techniques. According to Clayton, it all boils down to providing insight into vast amounts of data to improve performance with more accurate business decisions and more profitable relationships with guests.

"We have worked with various casinos to provide a comprehensive understanding of their guests and preferences," states Clayton. "In return, we have seen how casinos have leveraged this information into more relevant offerings, services and communications to provide a better experience for their guests and even more to remain competitive in today's harsh economic conditions.

"The trends I see in the industry are in wanting to do more analytics, especially data mining and predictions. There is an uptick in a requirement for hard core analytics. At the same time, there is keen interest in analyzing social media and how to use these networking channels to enhance customer relationships."

Konami Gaming
For years, Konami Gaming has been developing tools and systems to help casinos know their customer, especially from the gaming perspective. Now, Jeffrey Cohn, director of software engineering for Konami Gaming, thinks the company has envisioned a better and easier way to approach the non-gaming aspect. So much so, that Cohn reports that the company has filed a patent to secure the intellectual property on its Patron 360º Worth Evaluation.

Konami Gaming, part of the giant video game and software company headquartered in Japan, provides the gaming sector in North America and elsewhere with slot games as well as an advanced casino management system called the Konami Casino Management System or KCMS. The innovative Patron 360º Worth Evaluation is integrated into KCMS and is used to define and maintain a highly configurable series of key performance indicators designed specifically to assess the value of a casino patron.    

One of the challenges in tracking the overall value of a customer is the need for a complex, traditional solution, utilizing a central repository or data warehouse, explains Cohn. In doing so, operators can become locked into a set of solutions which are highly inflexible and costly to maintain.

According to Cohn, the Konami methodology does not require the hardware, integration fees or maintenance costs of an expensive data warehouse. The conventional extraction, transformation and load (ETL) process ceases to exist, he continues. Instead, all the patron non-gaming revenue is stored as a rating in the player tracking system using existing S2S interfaces.

Patron Worth allows the existing POS and hotel interfaces to configure a margin for the individual profits centers. "It's much like what the hold percentage is to a gaming machine," explains Cohn. "The margin computes the estimated profit and stores that information as a rating in the underlying casino management system."

"Scoring is based on a grading percentile, a zero to 100 numeric value for each patron over set periods. Each patron receives a recency, frequency and monetary value score for both gaming and non-gaming activity," explains Cohn.

Evaluating The Value
Today, casinos want to recognize their customers at every touch point, whether gaming or non-gaming. They want to use any action and interaction to develop an on-going relationship with these valuable patrons. And as multi-dimensional venues, casinos want to attract new customers to the expanding variety of offerings both on the gaming floor and beyond.

Just as obvious when speaking with any of these executives, there are still challenges ahead. One of the most important of these will be how to evaluate the exact "value" of the customer in a more complete 360-degree view.

What will be the optimal methods and means to extend guests stays, capture a larger share of trip budgets or get patrons to remain on property for both gaming and non-gaming activities? How will the fixed costs of assets and operating margins be assessed in this new equation? How will the variable costs of service and marketing be calculated in this new view? Is there an ideal mix of gaming and non-gaming guests?

We can evaluate the "value" through various equations and algorithms, but how do we come to a conclusion of what it all means to a casino? With today's economy putting even more emphasis on the bottom line, the answer must come as quickly as possible.

By Roy Student and Carolan Pepin Roy Student and Carolan Pepin

Roy Student is a longtime gaming and hospitality executive who currently utilizes his key expertise and experience as a sought-after consultant and speaker to the international casino and gaming industry from his base in Las Vegas. Student can be contacted via email at srsgsi@yahoo.com or by phone at 702-523-0444.

Since being recruited to Las Vegas in 1996, Carolan Pepin has helped to successfully market a number of gaming companies and an expansive catalog of new products and technologies to the world's largest casinos and gaming venues across the globe. She can be reached via pepinmarketing@aol.com or 702-526-5758.

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