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 firstname.lastname@example.org Extended Bio...
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