An Unsuccessful Model

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Guest writer Stevie Seidenstein explains how the Las Vegas boardrooms have the customer all wrong. 

There has been plenty of articles written looking back on Las Vegas and the way things “used to be”, but its time to take a step back and look at the issues facing today’s Las Vegas from the regular Las Vegas customer. Its important first off to explain that I am in no way an economist, accountant, or even have a college degree, but I do have something that seems to be missing these days…Logic.

First off let’s take a minute to picture ourselves walking down the strip in Las Vegas today. Besides the grand beauty of the resorts themselves, we have seen the transformation from the target customer being the average “Joe”, to an upscale yuppie who enjoys a 35 dollar cheeseburger. To make the point clearer lets jump back in time to a place that will make this point clear.

O’Sheas original place….favorite haunt of locals (former that is)….great facade

The time is the early 2000s and I am walking down the strip where I am all of a sudden pulled to look at a group of people standing and sitting at a blackjack table while shouting out loud what seems to be right on the sidewalk. As I step a little farther under the overhang I am met with the smell of cheap alcohol and fried food. As I step inside of this large dark opening I see what appears to be a funny looking Elvis knock-off playing a lounge show to a crowd that has a mixture of young people and a few pulling oxygen tanks to their seats. As I look further down the faded carpeted aisle I see tables full of yelling gamblers all being dimly lit by elegant looking brass chandeliers that my Aunt Diana had over her dining room table in the 80s. As I walk a little further I come to an open area packed with college students throwing ping pong balls into red beer cups right next to a food court frying up the source of the aroma in the Air. Where am I?… O’sheas. The least Bastian of the way Vegas used to be vs. the corporate monster that robs us of our money and our dignity.

Why I brought you to this time is simple. This was the Las Vegas which figured out long ago the formula to make the Las Vegas visitor want to go to their property and stay on their property. Its the old argument over quality vs. quantity and as the suits in the corporate boardrooms are finding, their battle is being lost in their decisions. The constant conversation with today’s pitch for “skill-based gaming” and hangout areas that offer ping pong and giant checkerboards results in their overwhelming attempt to gain the “millennial” to spend money. The reality of these pathetic attempts is that younger (and middle-aged) gamblers will spend more time and money on their properties if the Casinos revert back to giving us what we really want…cheaper booze,  more comps, and free parking.

Now for the logical look at how none of this makes sense to me. Let just for a minute think about all the casinos do these days in their attempt to make their properties appealing to the customer. As we look at recent changes to the hotels we see celebrity chefs getting palaces built into the properties requiring demolition and construction to the point where the overall facades of the buildings are being stripped down to the beams. If a property takes into account what it’s costing them to build these yuppie havens into their properties, it clearly must be in the millions of dollars per project. If any Vegas executive in a boardroom decided to forgo just one million dollar project to build another “Bobby Flays”, and puts that money towards free booze or more comps for the average gambler, that one decision would probably yield them more money and business than all of the 45 dollar steak burgers in the world.

We see this wrong model going on all over the strip with inviting a corporate chain store to cover up a historic fountain at Caesars. Wouldn’t anyone with a brain think that if tens of thousands of people are taking a photo op in front of that fountain, that capturing a small percentage of that number would still give more profit than they are getting off the Samsung fountain rent? Imagine if the same brainiacs in the corporate boardroom kept the fountain in place, decided not to build the million dollar celebrity chef burger joint, and then had people offering the free booze and comps offers in front of that fountain to lure in the customer? Like I say, I’m not an accountant, but logic would tell you that quantity would win over quality.

So where does this leave us? It leaves us in an environment where the consumer has to make the conscious effort to do their homework before boarding that plane. Until someone like you or me gets hired to make decisions behind those corporate walls, it seems like the Harvard grad who cant hold his booze will keep deciding the future of Vegas based on his excel spreadsheet. We all know that ACE Rothstein from the movie “Casino” was right when he said “the cardinal rule is to keep them playing and to keep them coming back. The longer they play, the more they lose, and in the end, we get it all”. We all know this to be the truth when it comes to going to a Vegas Casino, but the only way today’s Las Vegas properties will get their money from us is to get through the doors of their properties, to begin with. What I have to say is good luck!

[Photo Cred. LasVegasJunkie & Greg C.]

17 Comments on "An Unsuccessful Model"

  1. ChrisinNashville | January 8, 2018 at 7:38 am |

    Amen and Amen again!!! Thank you for your logic. I completely agree. I was in town in early December and about fainted when I saw the Samsung store over the Caesars fountains. I had read rumors but really could not believe that it had become a reality. Later that night, I stood front and center and watched the Bellagio fountains. I hope it was not for the last time. Next time Vegas Bright reports that the fountains have been taken over by Starbucks, they might not be fooling.

  2. Norm Rivard | January 8, 2018 at 7:53 am |

    Right on the money! Vegas is pricing itself Out if the vacation market!!

  3. I absolutely agree! I’m not a gambler, but one of the things I loved most about Vegas was that exciting atmosphere in the Casino. I will sit at a VP machine and play for a ‘free’ drink, find the best [and cheapest] breakfast on the Strip, but they’re sucking the life right out of it by taking away the things that made it different from going 2 miles down the road to the nearest local casino. I’m not the least bit interested in going to White Castle or Denny’s in Vegas when I can do that here at home.

  4. I totally agree! Why do you think revenue is down on the strip? I never go there anymore, I stay down town, where you can get a good meal for less, the booze is cheaper & the same booze as the strip, they used to have free parking on the strip now the greed has changed that, the giant casinos better open their eyes!

  5. Somewhere a room full of MBAs has figured out the resort will make more total $$ catering to one conventioneer with an expense account willing to spend $500 of his company’s money, than four guys like me only spending $100 of his own money.

    It’s sad, but probably true. At the end of the day, you have to pick the market you believe is the most profitable, and that’s the one the strip has chosen.

  6. Locals support this town when tourists aren’t here. My friends and relatives said it was the last time they would visit. The casinos are too greedy, you can go anywhere in their states to gamble. They get comped luxurious rooms like Las Vegas used to have, robes, coffee, free food and you can gamble and even win, plus free parking. Within the next five years this city will be begging for locals. Look at what happened to Lake Las Vegas when their casino opened. They didn’t want poor locals and went under after a while. Vegas charges & taxes for everything now. So sad.

  7. I almost totally agree, and if I weren’t a “regular” visitor to Vegas (if once a year qualifies as regular), from the UK, I’d find it hard to justify the outlay. We almost always stay on strip, but almost never centre strip. O’Sheas was almost certainly an afternoon/evening stop and it was that “Value for money” feeling that made it so. However in defence of the non centre strip casinos, there are still gems to be found. For the past few years we’ve stayed at the Tropicana, and since the remodel a few years back, have found the casino to be light and airy and the rooms of a decent acceptable standard. BUT more to the point our loyalty has been rewarded, from several nights comped room, to free shows, meals and drinks. I appreciate that when we come to Vegas it’s a big thing for us and we aren’t just popping in for a couple of nights now and then, we’re usually staying at least a week, but usually 2 weeks. To be able to save the cost of a room, plus not having to pay a resort fee, I’m more than happy to do the majority of my gambling on site whilst waiting for the wife to get ready, or after she’s turned in for the night. I don’t gamble exclusively at the “Trop”, but probably do the majority of my gambling there. I don’t think of my self as a “high roller”, but I obviously gamble for long enough each time for them to allocate me a casino host, and she looks after me very well. To reinforce your argument, I’ll always keep going back there, because I feel valued, appreciated and more importantly I feel rewarded for my loyalty. We did make one trip where our casino host was out of town, and was pleasantly surprised when a guy walks up to me, introduces himself, and explains as “Katie” was out of town she’s asked me to look after you, and then organises show tickets, and a slap up feed at their steak house, with drinks, just take care of the tip! Of course I’ll come back and stay next time. Gone are the days of $1 beers, $1 hot dogs and $1 shots (I still don’t know what they were), but we gambled drank and had fun, no make that FUN. Higher priced rooms, resort fees, pay for parking and less freebies is killing Vegas and as you say the execs need to waken up. Fine if you want to cater for the millennials go ahead, but remember, my kids have flown the nest, I don’t have any dependants, and I’ve got a shed load more disposable income than any “millennial” I know.

  8. I also agree with this article! As someone who has always loved the atmosphere, affordability and fun of a Las Vegas getaway, it saddens me to see what is becoming of Las Vegas as a whole and especially the Strip. I am the “average Joe”. I don’t have tons of money to spend on these ridiculously priced restaurants and shows….and I never stay on the Strip anymore where my “comped” room will cost me a $30 daily resort fee and $10 to $20 a day to park my car. Call me crazy but that doesn’t seem free to me! We started staying at places like The Orleans and Sam’s Town where your free room is actually free and they don’t charge you for the privilege of parking your car…at least for now. And don’t even get me started about the drink monitoring! I like to enjoy myself when I play slots and that includes chatting with friends while we play. I don’t want to be forced to gamble like a maniac just to get a free drink! I am on vacation and want to enjoy myself, not stress out over my play rate.

    These stuffed suits should wake up and realize that there are lots of people who gamble…including millennials …I can attest to that fact from going to the local casinos here in Southern California. These places are packed! It doesn’t matter which one I go to, they are thriving. These folks are deciding that they don’t want to hassle with the traffic, the price of gas and all of the things Las Vegas is taking away that used to make it worth the trek. I don’t go to the local casinos very often…maybe once or twice a year for just an afternoon, I would still rather go to Vegas for my gambling and fun. But like I said there are plenty who do. Just ask the state line casinos at Primm. They are definitely hurting because the majority of their business is now going to the So Cal casinos . To my reasoning Vegas is ending up with more and more non-gambling tourists because they are making it unattractive to that kind of clientele. People who want to gamble can just drive within an hour of their home to have fun. Instead they are attracting destination tourists. The people who want to shop and eat at overpriced restaurants and just gawk at the sight of these giant resorts. Maybe that will soon end with all of the de-themng going on. That also bums me out! I started coming to Vegas when i turned 21 and the Mirage was being built.
    I know Vegas will never be the bargain place it once was, but they could at least have some less expensive and fun options for the people who have supported and in a sense built Vegas over the years.

  9. Totally disagree. With the “logic,” not the sentiment. Given that the hotels and casinos are run by people who ARE economists, accountants and people with college degrees, logic tells us they wouldn’t be doing what they are doing if it negatively impacted the bottom line. They aren’t changing, so it obviously doesn’t. The bastion that was O’Shea’s probably couldn’t pay the rent on that frontage today.

    Logic says play Downtown.

  10. I feel that the old business model that’s described here was built on a world where many people didn’t have access to that many local casinos near them, so gambling itself was enough of a draw for Vegas. Now that legal casinos are far more widespread, merely offering ‘gambling’ isn’t going to be enough to get Joe Bloggs on a plane, let alone Ian Moneybags. You’ve got to give them a reason to want to come to Vegas for their gambling, something they can get there that they can’t get in their local casino. And you’re going to struggle to beat the locals in terms of the value of comps you’re offering given you’re already sitting on a pile of debt used to build these massive casinos supported by the old model. Which is what is likely behind the move to higher-end clubs, shows, dining, things that make people go ‘yeah, I’d like to go to Vegas and see all that’.

    You then run into the issue that these people you’ve got in with the lure of non-gambling activities don’t tend to gamble as much as the gamblers that used to sustain you, and so you need to start getting more money from them some other way. And so room rates go up, and you get resort fees and parking fees in an attempt to squeeze more money out of each visitor.

    All this is a symptom of a fact that the ‘old Vegas’ business model just doesn’t work anymore, though.

    (and just to add on this one, I am both an economist and an accountant, so maybe I see these things differently)

    • Norbert Rivard | January 9, 2018 at 5:23 am |

      Gamblers want their comps and freebies. That’s why they are moving downtown, as shown by the statistics. If you want me to stay “on the strip”, give me a little love or soon most real gamblers, not site-seeers, will be downtown!! Derek Stevens is proving that day after day!!!

      • Like I said, I don’t think the Strip is sustainable from the money of ‘gamblers’ alone anymore, and it’s realigning to a new business model that puts a much heavier weight on non-gambling revenue. In essence, the Strip is moving from being a pure gambling destination to an ‘entertainment’ destination. Steve Wynn’s been saying it for a while – see for example.

        And while we may bemoan the loss of ‘Old Vegas’, I think we have to acknowledge that it’s simply not viable anymore. Just look at Atlantic City for somewhere that didn’t diversify.

    • I disagree. I live closer to a myriad of casinos on the East coast, and make an annual week long pilgrimage to Vegas to seek out affordable gambling, food and fun.

      The overall ambiance of Vegas, opulence mixed with affordability is what I seek. I too so miss the old O’Shea’s. You could gamble in a fun cheap atmosphere while listening to live bands and eating fast food. I would literally spend 12 hours a day in there. Now, I spend maybe an hour in the shiny, cramped, boring new version of O’shea’s.

      The allure of Vegas was having it both ways. Seeing the grand scale of Caesars and the Venetian. Having an expensive dinner there one night, while eating Subway the next.

      Vegas has changed a lot in just 10 years, and not for the better. Every hotel on the strip cannot be upscale and expensive.

      I find the Linq to be sterile and dull. Imperial Palace may have been a bit run down, but I’ll take the fun atmosphere with the Dealertainers and cheap gambling any day.

  11. You have logic but not math.

    The average gambler and the average visitor are not the same. In the face of the growing fees and expensive retail, visitor numbers are still trending up. They do a ton of convention business. You have LA partiers. And many tourists who largely don’t care about gambling.

    Can you attract people with better deals, cheaper food, and comps? OF COURSE. But you make less money off of those people.

    The influx of retail and restaurants and what have you are in large part because those places PAY RENT. Often operated not by the casino. And of course, if you stick one bargain eating place amid all your 25 dollar breakfasts, it drives down demand and prices elsewhere.

    I don’t really like the strip changes either. I’d like more cheap deals, and more comps, and don’t care about 3/4 of the stuff they build these days. But every customer is not me. And catering to me is not going to max anyone’s money.

    As for the millenial “problem”, more comps for blackjack won’t matter if they can’t get people to play blackjack. The people walking by tables don’t know what 6:5 is, or what they could get for comps. They simply are not as interested in the game.

  12. There are a lot of factors, too many to mention. One example is I think part of the pricing model today for many of the resorts is directly related to their desire to attract convention business. I think the convention go’er who puts everything on the company expense account doesn’t care about paying for the $35.00 burger, because it’s on the company’s tab and the Vegas casino corporations know this. But for those whose visit is solely a vacation, you guys are now shut out because that $35.00 is coming directly out of your pocket so the value is no longer there. How many people do I see today carry fast food up to their rooms. I never saw that 30- 40 years ago in this town, but now everyone seems to do it, because their vacation budget can’t handle the casino restaurants.

    I honestly think the old model would still work on the Strip, in recent times I think of Barbary Coast in that way. Hell I think if the South Point was smack dab in the middle of the Strip it would work, because Michael Gaughan learned from his father. We will never know the profits of the South Point because it’s not a public company, but that place does killer business constantly and it’s a no frills place essentially in the middle of nowhere. I hold firm the old way still works.

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