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I know most of you won't like them and will say its all crap and the management teams know nothing, but along with some coworkers we had a brainstorming type session with a high-level executive for one of the Strip operators. We went over all the things you guys are thinking about and saying they should do, but guess what, few have a chance to happen.
Resort Fees
They know some hate them, but this operator said his surveys show the resort fees aren't that hated by their target markets. And he said he's had friendly conversations with competitors and they have found the same thing. He did say if they were forced to change by new laws, it wouldn't really impact them that much but they also doubt it would grow demand at all. Listed prices would just increase, which is why almost no casino properties have tried to market themselves as the no resort fee option.
He did say there is consideration for a multi-property portfolio to go to more of a differential between resort fees. So a value property might be lowered to $25-30, mid-range could remain around $40 and top shelf goes to $60, or something like that. The changes could be part of a marketing push related to internal efforts in terms of categorizing offers to customers at different levels of budget. They might even take out or add amenities, with value seeing minimal pool or gym options, while the top shelf gets improvements in those areas as they concentrate their offerings at the places where they charge for them.
Parking Fees
They feel parking fees are strategic that they don't plan on removing them completely. Surveys they have done show the pricing isn't as sensitive as one would think. If it costs $15 to park 3 hours, they don't believe charging $5 instead would change visitation much. The argument being the person who doesn't want to spend $15 generally wouldn't spend that much in profit in the building if the parking was free. He pointed out the people say that I would put $20 in a slot machine if I could park for free miss the fact that $20 into a machine rarely equates to $20 of expected profit for the casino.
He did say there are a lot of discussions going on about perhaps making it much easier to obtain free parking with new categories of player tiers. They are considering lowering the qualifications to get free parking for just modest play, or even just a few meals in property restaurants from locals or visitors. They might even have a period of free parking for locals to give them a shot at reaching this level.
Non-smoking property
He said there is discussion, far from a certainty, that they might take one of the properties and make it smoke-free. Its not a strategic move to gain gaming revenue, which is what everyone thinks about, but to create growth from target markets which may be turned off by the presence of smoking. It probably will have a smaller gaming floor and new dining and amenity offerings. They think this is more a play on the business traveler and the health conscious tourist. They might build out the best quality gym/spa, have a range of healthy restaurants, and offer access to lots of meeting space.
I think this one may take some time, but this could be a great move. It could take some resort that faces heavy competition and differentiate it. The problem has always been worry about losing gaming revenue, but gaming revenue is a relatively small part of the revenue stream at some resorts. They can afford to take that risk if they can charge more for rooms, resort fee and unique restaurants.
One 'high level' executive may have expertise at operating a property but the question at hand is social psychology economics in time of a pandemic with no vaccine yet in sight. Las Vegas relying on several hundred rich people to fly in and 'carry' a city will not work. This is a country that no longer has a middle class. There are only higher and lower levels of working classes. As of yesterday we have reached unemployment at Great Depression levels. All prices are going to have to come down in Vegas to appeal to the masses if it is to survive. I think some executives are in deep denial. With no flights from overseas and affluent Chinese that is even more revenue lost. I love Las Vegas and want it to survive and prosper but I think there are big changes in store for everyone.
I know most of you won't like them and will say its all crap and the management teams know nothing, but along with some coworkers we had a brainstorming type session with a high-level executive for one of the Strip operators. We went over all the things you guys are thinking about and saying they should do, but guess what, few have a chance to happen.
Resort Fees
They know some hate them, but this operator said his surveys show the resort fees aren't that hated by their target markets. And he said he's had friendly conversations with competitors and they have found the same thing. He did say if they were forced to change by new laws, it wouldn't really impact them that much but they also doubt it would grow demand at all. Listed prices would just increase, which is why almost no casino properties have tried to market themselves as the no resort fee option.
He did say there is consideration for a multi-property portfolio to go to more of a differential between resort fees. So a value property might be lowered to $25-30, mid-range could remain around $40 and top shelf goes to $60, or something like that. The changes could be part of a marketing push related to internal efforts in terms of categorizing offers to customers at different levels of budget. They might even take out or add amenities, with value seeing minimal pool or gym options, while the top shelf gets improvements in those areas as they concentrate their offerings at the places where they charge for them.
Willy,
You're right. Some of us don't like what you've said. Since I don't have the ear of casino owners, I'll tell you in hopes you will pass the word. Casino owners have done VERY WELL FINANCIALLY for the last what, 20 years? However, COVID-19 has come and times have changed. Casino owners need to get off their high horse. Like another poster on this board said, I'm a tourist just WAITING for Vegas to reopen. I'm sure there are many Vegas lover tourists like us, just waiting to be allowed to visit again.
However, the money-grubbing from the casinos won't work post COVID-19. Prior to the shutdown, the resort-fee madness had developed into an infection that was so bad that even the downtown casino hotels had gotten caught up with that nonsense. What percentage of the country is unemployed now? Isn't that going to grow as the state re-openings continue to slowly happen but there won't be enough customers spending money to keep every businesses afloat? Vegas will be lucky to get any paying tourist over the next year. Accordingly, those resort fees need to either come way down to let's say $10 a day or be ELIMINATED altogether. Each casino on the Strip has hundreds of room, some have 1,000s to fill. If these rooms are going to be filled, to at least 75% or more, with paying customers then casino owners need to drop the resort fees (aka rip-off scam). It's as plain and simple as that.
So now Willy, tell them that you earnestly tried to get potential tourists on a travel site to accept the concept of rip-off fees, but this time, it's NOT going to work. Vegas will have to revert to RETRO prices if they want to rebuild their tourism base. That is all for now. Thank you.
P.S- I still love Vegas just not the resort fees.
Thanks Willy702 for the update. I hope they do pass the strategic free parking for locals. Even if for awhile. When I told my friends and family what you wrote they all cheered and said that would be great.
One 'high level' executive may have expertise at operating a property but the question at hand is social psychology economics in time of a pandemic with no vaccine yet in sight. Las Vegas relying on several hundred rich people to fly in and 'carry' a city will not work. This is a country that no longer has a middle class. There are only higher and lower levels of working classes. As of yesterday we have reached unemployment at Great Depression levels. All prices are going to have to come down in Vegas to appeal to the masses if it is to survive. I think some executives are in deep denial. With no flights from overseas and affluent Chinese that is even more revenue lost. I love Las Vegas and want it to survive and prosper but I think there are big changes in store for everyone.
How can you say we don’t have a middle class?! Most people are middle class. There’s no use arguing until you define your terms, though. What is middle class to you? Middle class income is somewhere from $50,000 per year to $250,000 per year depending on the cost of living locally. There are tons of people in that group, most people in fact.
I also don’t think a lot of people give a crap about the vaccine one way or another. I’m looking forward to you guys all getting vaccinated with whatever barely-tested solution comes to market, but I’ll be happy without it. The only vaccine most people need is a placebo pill, we can call it “Panic Be Gone,” and if you just forget the incorrect data from February and realize that the actual death rate is 0.1% and just 0.01% for 18-45 year olds, we can all go back to living a normal life without a care in the world. It’s only because of mass idiocy and panic that anything has changed. Not the actual virus, which isn’t dangerous to most people at all.
Resort fees are used by the casinos to avoid taxes. They will be the last thing to go away.
Explain the mechanics of this. Any revenue that makes it to the bottom line gets raked by corporate income taxes. Have the county/state not taxed resort fees as part of the room tax yet? That has had to cost the casinos a pretty penny in campaign contributions, because that would be an easy source of revenue.
My understanding of resort fees are that they are a way of extracting more revenue from rooms wholesaled at a significant discount to third party consolidators.
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The physical plants are mostly not suited for low end clientele. And the plants are not going away any time soon.
So we may see some more and even less expensive Casinos. But the Wynn and Bellagio will stay as they are.
Most of the LV room base was either built to the low end client or age down to that level. Yes, there's Wynn, Bellagio, etc. But there are even more low and mid level properties.
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Just wait and watch. The fundamental economics of the Strip have not changed.
They are on hiatus. And how quickly they'll return is undetermined.
But true. They make most of their profit off of a significant minority of affluent, free spending customers.
How do we know that?
I don't work in the industry but I've spent plenty of time on the strip. To the untrained observer it would appear the majority of traffic in the casinos is vacationers and conventioners. I also used to see quite a few locals, despite all the claims that locals don't go to the strip, until the parking fees went in.
Nobody really cares about resort fees and paid parking. What is THE NUMBER ONE complaint you hear about Las Vegas? Show's how out of touch these people are. I hope it bites them in the ass big time as they chase the same couple of hundred whales around for their scraps.
I'm so tired of resorts using the "well, you aren't our target market" in response to any price complaints. It's a phony attempt to intimidate people who are afraid of what people think of their social standing. "If you have to ask, you can't afford it". Screw 'em I say. It's just weird that locals casino's have figured out how to be profitable catering to these lowest of the low.
How can you say we don’t have a middle class?! Most people are middle class. There’s no use arguing until you define your terms, though. What is middle class to you? Middle class income is somewhere from $50,000 per year to $250,000 per year depending on the cost of living locally. There are tons of people in that group, most people in fact.
I also don’t think a lot of people give a crap about the vaccine one way or another. I’m looking forward to you guys all getting vaccinated with whatever barely-tested solution comes to market, but I’ll be happy without it. The only vaccine most people need is a placebo pill, we can call it “Panic Be Gone,” and if you just forget the incorrect data from February and realize that the actual death rate is 0.1% and just 0.01% for 18-45 year olds, we can all go back to living a normal life without a care in the world. It’s only because of mass idiocy and panic that anything has changed. Not the actual virus, which isn’t dangerous to most people at all.
Hello, Sorry but 50k a year has not been middle class for decades now LOL! That is poor. To define what class you fall in the most accurate measure is to see how long you can stay afloat without working and pay all your bills. Think about that for a moment... How many people can go just one month in this county with out working? Most Americans are heavily in credit card debt. There is no middle class, there is only higher and lower working classes. Maybe a frugal individual with no debt that lives in a cheap state like Mississippi and makes 50-100k a year can call themselves middle class but that is increasingly rare. For an entertainment city like Vegas to survive prices need to be brought down to the common masses.
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Tell Casino owners..
