When it comes to revenue management, casino resorts require a different approach than traditional hotels. Implemented effectively, a solid casino-centric revenue management strategy can help casino managers market their casino to the right audience and price their products to boost bottom-line revenue.
We spoke with Nevin Reed, Vice President of Casino Services, to explore the fundamental concepts behind casino revenue management.
“Rapid advancements in technology have changed the game,” Reed says. “The best casinos gather supply, demand, worth data, total profit and analyze it. They use it to make operational, comp and pricing decisions.”
Or at least they should.
Reed offers valuable insights into classic Revenue Management concepts as they apply to casinos. Employing these different tactics as part of an overall revenue strategy can help casinos become more profitable while simultaneously improving the guest experience.
1. Segmentation
Customer segmentation rules are different for casinos than in virtually any other revenue management application. Hoteliers, for example, segment individuals and groups as separate parts of their business; business travelers are treated differently than leisure travelers.
Segmenting in casinos gets a lot more complex. Guests who play high-stakes games and drink high-priced alcoholic beverages should be treated differently than guests who play penny slots and drink water. When you start to drill down into different segments, you can create better offers for different guests that will lead to a more profitable business.
“When you let your prices be fully dynamic, you open yourself up to higher revenues,” Reed says. “Keep all your segments open and adjust your rates accordingly. Let the customer make the decision not to book with you. Don’t make it for them by closing off a rate.”
2. Forecasting
High-worth customers are known for booking at the last minute. When casinos are armed with a forecast that predicts this type of demand, they can price accordingly. (They can also better balance room inventory and staffing levels.)
“Having a system that can give you real-time pickup is highly valuable when you’re creating forecasts,” Reed says. “It helps ensure that you’ll always have room for your best customers.”
3. Open Pricing
Open Pricing allows casinos the flexibility to dynamically free-float pricing for all segments by independently pricing every single segment, channel, room type and offer.
“Open Pricing allows you price off demand to maximize revenue over high demand and need periods,” Reed shares.
4. Loyalty and revenue management
Casinos can tap into their existing loyalty programs to track customer spending across an entire property. They can combine that data with Open Pricing and begin dynamically customizing offers and rates based on the total value of each customer.
“You need to establish 360-degree view of your customer and then determine what personalized offers they should receive,” Reed says, adding that with the right tools, casinos can go beyond the typical comp or no-comp decision and optimize revenue with each booking. “Casinos can even shift business from OTAs to their websites by offering fenced rates to loyalty members who book direct.”
5. Loyalty reinvestment
How do casinos keep their customers loyal, but still remain profitable? Simple: reinvestment.
“Reinvesting is an incredible piece of the puzzle that you have to understand to stay profitable,” shares Reed, adding that casinos must evaluate a customer’s overall worth and then use that information to tailor marketing reinvestment through enticements.
“The real future of reinvestment is becoming a completely yieldable and dynamic function of your pricing tools,” he concludes.
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This post originally appeared on the Duetto blog here and is reproduced with their permission.