Mr. Tapling

Finance & Investment

Maximizing Non-Gaming Casino Revenue

By Mark Tapling, President & CEO, InfoGenesis

Non-gaming casino revenue was once considered an oxymoron. In today's industry though, it has become a vital part of most casino operator financial reports. In fact, some top players in the industry have indicated non-gaming revenue accounts for 50% or more of total revenue.

Less visible to many in the hospitality industry is the important role that technology can play in maximizing non-gaming revenue. Certainly some of the standbys of technology value like flexibility, scalability, and reliability contribute. But they represent a small part of a bigger story. It is the guest-centric and integrated nature of present and future technology that will allow non-gaming casino revenue to reach its potential.

What's Happened in the Industry

As casino resorts and hotels have matured, evolved and segued into the luxury segment, non-gaming aspects of these operations have taken on stand-alone significance. Hotel rooms in Las Vegas, Atlantic City and other gaming destinations were once "comped" for many players or available at reduced rates. These rooms now command some of the highest average daily rates in the industry.

There have been changes in other areas as well. Investments in celebrity chefs and high-end restaurants to achieve a competitive edge have consequently demanded more than "respectable" bottom line results. Retail operations-far from the t-shirt and sundry shops of days past-carry designer names and, in some cases, achieve shopping mall size. World-class spa operations and entertainment venues are attractions in and of themselves as casinos have turned into full-fledged destination resorts. On the global stage, an explosion of gaming resorts in Macau and other exotic international locations have underscored the size and complexity of this rapidly expanding industry.

Of course there's a pattern here-a steady march towards better services, creating a destination for guests who increasingly participate in their own travel planning, and retaining guest dollars rather than seeing them go somewhere else. It's been an exciting and natural evolution. But by no means is the industry done changing. The next evolution will be a little more subtle in established markets, but no less important.

The Industry Now

While the infrastructure and revenue generating capacity in many markets has been built out in a physical sense, the same thing isn't true of technology. Just because you have the hotel with thousands of rooms, the themed shopping mall, or the world-class spa won't ensure you are maximizing revenue. It's the beginning and could be the middle, but definitely not the end.

What I'm talking about here is the fact that the industry has grown exponentially and matured in terms of base offerings, but not what it does with those offerings. They remain largely separate, without the ability to integrate or to be accessed by guests in an intuitive way.

Growth to this point for many casino operators has been hard enough. Management and reporting for all these physical entities has become difficult for some. Those venues that do have some semblance of control are required to spearhead large technology integration projects on their own to tie reporting together for all their business entities. It's an agonizing time where technology deployments have not kept up with growth and changes in the market.

The Benchmark for POS Technology

Why hasn't technology been able to keep up with the industry as non-gaming revenue has grown so drastically? From the perspective of point-of-sale (POS), I believe it is because the benchmark that has been set for value doesn't match today's multi-dimensional venues. Many deployments were scoped, acquired, and implemented with a much simpler set of requirements than exist today. Systems that don't recognize a common customer-whether they are in the spa, restaurant, coffee shop, or casino-atrophy the return on investment for the entertainment and dining side of the business.

For POS, it requires the system is flexible in its application and can accommodate disparate venues within your organization. It means it can scale when needed to allow your organization to grow and adapt to change that includes new product mixes, customer preferences, and entertainment trends. It also means it is reliable and can operate in a 24-hour environment, with the ability to seamlessly handle the oscillation between online and offline operations. And in the end, without fail, it must enable you to financially close and report on a multi-dimensional venue as a single financial enterprise.

I lead a company that has a strong track record in re-defining these benchmarks in value. In order to maximize revenue considering current dynamics in the industry, technology companies need to do much more.

Current benchmarks are primarily operational in nature. Of course they have guest implications-offline capabilities being the most apparent-but they are often focused and have an emphasis on gaming operations. This is at odds with the casino industry's increased focus on the guest. Bringing technology companies in line with this focus is vital in producing the integrated, guest-centric technology that will help introduce new services, help casinos capitalize on guest needs, and ultimately maximize non-gaming revenue.

Forces Driving Change

It has become increasingly clear that casino operators are motivators and drivers of change. Most are tired of being the technology integrators. It has become a necessary evil for most in a world where technology companies don't have all the kinks worked out themselves. Importantly, there has been some significant movement recently in terms of how some technology companies create solutions, how they communicate with one another, and how they partner together.

Organizations like Hotel Technology Next Generation (HTNG) have grown in importance, with many members working together to produce guest-centric technology solutions. Deeper product integration and a real dialog about issues casinos face has opened up a whole new set of possibilities for operators. My company is one that has focused on the guest experience management concept. This means we're driven by delivering solutions that help you know who your guests are and what they want-enabling you to capitalize on their needs. It's a different level of solution that integrates several products and provides new services you can deliver to guests. The end result is technology that streamlines internal operations, helps you increase per guest revenue, and earns the ultimate gift from your guest: loyalty.

InfoGenesis, along with IBM, Bally Technologies, Agilysis, and SSA Global have come together to form the Casino-in-a-Box partnership. This will be another force that will drive technology change in the industry. This partnership is aimed at providing casino operators everything they need in an integrated package-making streamlining operations, increasing profitability, and improving the guest experience possible across all operations and venues.

It's important to note that integrating systems to accomplish these things isn't a one company show. POS is the customer entry point and acts as a central backbone for information exchange, reporting, and point-of-service in many cases, but is one component. By integrating it with other solutions you can really begin to realize the power behind a guest-centric approach. And from what we've seen in the past, a single casino operator or single technology company trying to take on the integration process alone can only produce limited results. The single integrator approach often lacks the power necessary to either envision or execute on all the possible product synergies that can affect revenue.

The Modern Opening

The basic concept is this: Maximizing non-gaming revenue is dependant on using integrated technology that produces guest-centric services. We also add to that the cross-system, enterprise-level reporting that results from integrated solutions. It is both the better guest services and reporting that come from integrated solutions that help drive profitability.

The Borgata in Atlantic City is one place that is realizing synergies between applications. When the casino opened a few short years ago, it was the first in Atlantic City in over 13 years. It was a great opportunity to succeed on a grand scale. Part of their realized success was due to the care they took in selecting, implementing, and integrating technology.

One interesting synergy is how the point-of-sale and player tracking systems work together. Guests are able to use reward points accumulated in their player tracking system for meals or retail purchases at the 11 restaurants and 11 specialty boutiques across the property. This gives guests additional reasons to stay on-property and spend money-creating more loyal guests in the process. It is through integrated, guest-centric solutions like these that you can maximize non-gaming revenue.

While the Borgata is a great example of how solutions can work together and become guest-centric in nature, there is so much more that can happen if technology companies take the initiative by making guest-centric solutions and partnerships a priority.

Where We're Going

We've seen some initial progress with guest-centric solutions in the gaming industry. Over the next few years, you'll see some impressive integration that will allow casinos to differentiate themselves for a time in the industry.

Consider this scenario: A guest gets into their room late and wants to order room service. They either turn on their TV or sit next to their web-enabled phone and place an order through the self-service application, scheduling it to arrive after they've taken a shower. The order comes through to the point-of-sale application and fires at the appropriate time on kitchen printers. The order is also charged to the room via the point-of-sale/property management system interface. The guest receives their food in a single, seamless transaction, and perhaps even gets points for having placed their order.

This is the power of integration: the ability to offer new or enhanced services that benefit guests, as well as operators. The scenarios are endless. Direct guests to on-site restaurants that have dining ability, send coupons to guests via an SMS message on their cell phone for room or dinning discounts if they have just lost money, or give guests the ability to order drinks or food from slot machines. Capture more guest revenue, create better experiences, and get more useful data from your technology-that's what integrated, guest-centric solutions are about. Working together, your technology infrastructure can be trained in the art of anticipation.

Going back to the benchmarks of technology value, you can certainly use base functionality sets to increase current revenue. But to maximize revenue from non-gaming entities, it is going to take new guest-focused services. Our advice is to look at your own applications and the companies that provide them. Then determine what you want to do with your technology so you can serve your guests better. You may come up with some interesting answers that open up new ways to maximize your revenue and receive the ultimate gift from your customers: loyalty.

Mark Tapling is President and CEO of InfoGenesis, the award-winning technology company that offers hospitality and foodservice operators feature-rich solutions for mission-critical operations. Offerings include InfoGenesis Point-of-Sale (POS), Self-Service and Reservations. Solution development focuses on guest experience management (GEM), which is about giving guests more convenience and increasing per guest revenue for operators. Industries served by InfoGenesis include hotels, resorts, casinos, cruise lines, sports and entertainment, restaurants and managed foodservice. Mr. Tapling can be contacted at 800-242-5434 or mtapling@infogenesis.com Extended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
RESOURCE CENTER - SEARCH ARCHIVES
General Search:

SEPTEMBER: Hotel Group Meetings: Blue Skies Ahead

Jay Spurr

Meeting planners have more than enough to think about when it comes to searching for the perfect venue – and eco-consciousness is increasingly making its way top of mind for many. It is currently estimated that the average hotel guest generates 2.2 pounds of waste each night of their stay. And, with the meetings and event industry recently being deemed as the second most wasteful sector in the United States by the EPA, we at JW Marriott Austin knew we had to go above and beyond to deliver more efficient meetings and events with the lowest possible carbon footprint. READ MORE

Del Robinette

Engagement and commitment are at the core of our professional lives in a 24 hour a day, 7 day a week operation. No matter the size or complexity of the box, engagement and our commitments should be a core fundamental that not only surfaces in our every interaction, but guides and directs our proactive decision making and our strategies and executions. Hospitality 101 teaches us as hospitality professionals, to engage with our guests, to make eye contact at 10 feet, to speak within 5, to escort when possible and to use our guests name in conversation. READ MORE

Katie  Davis

I had a bit of an “out of body” experience recently. I was attending a corporate meeting, which was held in a hotel meeting room. As usual, I was multi-tasking for most of the meeting. Doing my best to remain engaged with the meeting content, while simultaneously managing an ever-growing email inbox and “To Do” list. During a break, I was pacing outside the meeting room, on the phone with my office, when I noticed some snacks and beverages set-up adjacent to the meeting room entrance. READ MORE

Deirdre Martin Yack

Meeting planning in today’s world is more complex than ever. Whether you’re a planner or a supplier, our jobs are now 24/7. We are dealing with shorter lead times than ever, tighter budgets (on both sides), and expectations based on the perfection projected by social media and reality TV. Our job is no longer simply about dates, space, rate – we now need to compete at a world-class level on a daily basis. As a supplier, it takes extreme creativity at the venue level. Starting with the initial design, event space must be as flexible, innovative and as Instagram-worthy as possible. READ MORE

Coming Up In The October Online Hotel Business Review




{300x250.media}
Feature Focus
Revenue Management: Technology and Big Data
Like most businesses, hotels are relying on technology and data to drive almost every area of their operations, but perhaps this is especially true for hotel Revenue Managers. There has been an explosion of technology tools which generate a mountain of data – all in an effort to generate profitable pricing strategies. It falls to Revenue Managers to determine which tools best support their operations and then to integrate them efficiently into their existing systems. Customer Relationship Management, Enterprise Resource Planning, and Online Reputation Management software are basic tools; others include channel managers, benchmark reports, rate shopping tools and review systems, to name a few. The benefits of technology tools which automate large segments of a Revenue Manager’s business are enormous. Freed from the time-consuming process of manual data entry, and having more accurate data available, allows Revenue Managers to focus on analysis, strategies and longer-term decision-making. Still, for most hotels, the amount of data that these tools generate can be overwhelming and so another challenge is to figure out how to effectively utilize it. Not surprisingly, there are some new tech tools that can help to do exactly that. There are cloud-based analytics tools that provide a comprehensive overview of hotel data on powerful, intuitive dashboards. The goal is to generate a clear picture, at any moment in time, of where your hotel is at in terms of the essentials – from benchmarking to pricing to performance – bringing all the disparate streams of data into one collated dashboard. Another goal is to eliminate any data discrepancies between finance systems, PMS, CRM and forecasting systems. The October issue of the Hotel Business Review will address all these important developments and document how some leading hotels are executing their revenue management strategies.