Back in the day, casinos were synonymous with gambling. But with slot machines disappearing from casino floors,1 and new casinos mushrooming across the country, the competition for the customer wallet has entered into high gear. It’s estimated that by 2023, Las Vegas strip resorts will make about $2 billion more from their rooms than in their casino.2 And today, revenue from retail, dining, and entertainment is outpacing gaming revenue.
As a rule, casinos are savvy with their data, segmenting customers, tracking player and ancillary spend, and applying revenue management (RM) strategy to room pricing based on these findings. But to achieve total profit optimization, casino hotel operators must take those RM tactics a step further. They need to understand buying behaviors throughout all revenue centers in the property and use these analytics, including other atypical revenue centers such as spa, F&B outlets, pool and event business. Doing so will drive your overall profitability, while simultaneously increasing your guest experience and loyalty.
Strengthen Your Spa Business
According to the Global Wellness Institute™, wellness tourism is projected to reach $919 billion by 2022. And the vast majority of wellness tourism expenditures (86%) come from “secondary wellness tourists.”3 These are your guests – the ones who aren’t specifically seeking wellness vacations but rather participate in wellness experiences while visiting your casino resort.
You may already be offering discounts to fill empty treatment rooms during low periods. However, constant discounting can have a negative impact on your customers’ value perception, ultimately eroding your spa business. By employing a more strategic approach, you’ll maximize revenue during peak periods and stimulate the right demand during off-peak periods.
To begin, identify which treatments are most and least profitable for your spa. Use yielding tactics that revolve around time of day, length of treatment, cost of treatment, and treatment room turnaround time. You also want to consider how to attract more local/non-hotel guests, and sell more add-ons, such as inspiring guests to spend more on products. One resort found that by giving their spa therapists a little extra time with guests pre- and post-treatment, they increased product sales by an additional $75 per treatment – making it worth more than scheduling additional treatments during those same time frames.
And instead of booking treatments on a first-come, first-served basis, optimize profits by offering treatments with the highest margins during high-demand times. If your spa has stations that accommodate both high-product (a.k.a. high cost) facials and low-product/lower-cost massages, during peak periods use those spaces exclusively for 60-minute massages and save the 90-minute facials for off-peak times. These are a few simple ways to start to increase profit in your spa.
Fortify Your F&B Revenues
Applying revenue management principles in your food and beverage outlets can serve up greater profits as well.4 Start with a thorough analysis of your systems to identify trends. Once you identify them, you can do things such as offering daily specials for less expensive items during slow times and adjust pricing based on demand of the items. Another technique is menu engineering. The menu can be one of your brand’s most effective marketing tools and a major contributor to your short- and long-term profitability.
Menu engineering is not based on random seat-of-your-pants decision-making, rather it’s rooted in analysis of key performance metrics from your point-of-sale (POS) data that includes menu item costs, prices, sales quantity (popularity), and net contribution margin. By accurately categorizing menu items, you can better capitalize on your menu’s sweet spots.
•Stars: high profitability, high popularity
•Plow Horses: low profitability, high popularity
•Puzzles: high profitability, low popularity
•Dogs: low profitability, low popularity
Naturally, you want to engineer your menu in ways to sell more Stars than Dogs. Stars should be featured prominently on your menu through callout boxes, tempting descriptions, and/or with mouthwatering photographs placed beside them.5 Increase sales of Puzzle items by encouraging servers to suggestively sell these items.6 For example, when asked for suggestions, your server may say, “You should try our chicken Alfredo. It’s very popular, and our cream sauce is seasoned with fresh, locally grown basil.”
In general, appetizers have lower contribution margins than entrées, but they can still increase overall check size and the profitability of your restaurant. Because appetizers are served and eaten during the normal waiting time for preparing the main dish, you increase revenues without decreasing seat turnover or increasing labor costs.
Refresh Your Pool Business
Make the most of your swimming pool by getting creative. Offer private morning stand-up paddleboard (SUP) yoga lessons from an expert instructor or serve tempting afternoon cocktails at your poolside bar.7 And consider revenue managing your cabana rentals. The pool operations team is probably relying on gut decisions to sell cabanas with little or no data. And if you’re honest with yourself, it’s probably not working. To maximize cabana and daybed revenue, yield them similar to traditional room optimization. You must understand their demand and price based on that demand while simultaneously understanding how the cabanas are booked. By providing guests with a better deal the further out they book, you’re more likely to increase revenue and have more reliable reservations of your cabanas.
Boost Profits with Concerts, Events & Festivals
Be sure to include local special events, national conferences and festivals in your RM forecast. Incorporating this information allows you to create a more accurate demand forecast that impacts your pricing strategy. You can create special packages and coordinate with your marketing team, using these events to bring in traffic during the off-season. A sophisticated revenue management solution will track the total demand that events produce so you have insight as to who will be coming to this event and others like it in the future.
And if you don’t already host music events at your casino hotel, think about turning a ballroom or banquet hall into a concert venue during slow periods. Open the event up to both hotel guests and locals and include entrance as a reward for loyalty program members. Drive incremental revenues with a curated collection of concert-related items for sale in your gift shop.8 And strategically offer themed drinks and snacks in your beverage outlets to help drive profitability as well. Placement of your revenue outlets also impacts revenues. Think about an outdoor festival or concert. If everyone is going to run up to the stage when a popular band is performing, placing beverage outlets closer to the stage may help increase sales. The key is to accurately analyze your demand patterns to effectively yield it all.
Just as with your rooms, revenue managing your non-room revenue streams involves accurate forecasting as well as knowledge of your market and the buying behavior of your guests.9 But it also involves building a culture within your organization that embraces your new, more holistic revenue strategy. Include members from every department in your weekly strategy meetings, because if you have a great vision, but your teams don’t have buy-in, you’re going to have an uphill battle when it comes to implementing it. And implementation is crucial. Because when you look at the number of room nights you produce, for every dollar of incremental spend you capture, you’re going to carry to your bottom line. This will result to a significant impact to your bottom line.
1 Ruddock, Steve. “Time to Sound the Alarm? Commercial Casinos Slashing Slot Machine Numbers At Alarming Rate.” U.S. Poker, 20 Apr. 2017, www.uspoker.com/blog/casinos-slashing-slot-machines/17120/.
2 Schwartz, David G. “Seven Year Switch: How Las Vegas Hospitality Has Changed.” Issuu, From Seven With Love: The Anniversary Issue | Vegas Seven, 15 Feb. 2017, issuu.com/vegasseven/docs/lv28956_vegas_seven_02_16.
3 “Global Wellness Institute: Statistics & Facts.” Global Wellness Institute, 2019, globalwellnessinstitute.org/press-room/statistics-and-facts/.
4 Crowley, Matthew. “Hotel, Food and Beverage Revenue Boosts Profits, Revenue for Monarch Casino.” CDC Gaming Reports, Inc., 24 Oct. 2018, www.cdcgamingreports.com/hotel-food-and-beverage-revenue-boosts-profits-revenue-for-monarch-casino/.
5 “Total Revenue Management & Menu Engineering.” Australian Revenue Management Association, 14 Aug. 2014, revenuemanagement.com.au/total-revenue-management-menu-engineering/.
6 Faculty, BC. “The Principles of Menu Engineering.” Basic Kitchen and Food Service Management, BCcampus, 4 Sept. 2015, opentextbc.ca/ basickitchenandfoodservicemanagement/ chapter/describe-the-principles-of-menu-engineering/.
7 Bhat, Divya. “6 Hacks for Hotels to Increase Non-Room Revenue.” Hotel Industry News by Hotel News Resource, 8 Oct. 2018, www.hotelnewsresource.com/article101995.html.
8 Carlino, Nicole. “Riding the Wave of New Revenue Streams.” Hotel Business, 15 Jan. 2018, www.hotelbusiness.com/riding-the-wave-of-new-revenue-streams/.
9 Ibid., 
Angie Dobney is the vice president of Gaming & Casino Sales at The Rainmaker Group. An industry veteran with more than two decades of experience in revenue management and hospitality operations, she provides hands-on optimization of total resort profit to Rainmaker’s industry-leading gaming and hospitality clients. A recognized expert in total asset and portfolio optimization, and as enthusiastic as she is knowledgeable, Dobney is frequently tapped to speak at conferences around the globe. She is a guest lecturer on hotel and hospitality asset and revenue management at the University of Nevada, Las Vegas, her alma mater, where she was named Mentor of the Year in 2007. She continues to seek out opportunities to get involved in other university programs in her quest to inspire and motivate the next generation of revenue managers.