erinwootan

Risky Business

Posted on: May 12, 2011

So, by now you’ve heard the story about how Las Vegas Sands cut comps to their players at the Venetian LV and Palazzo LV, but a new report just came out about how that has affected their business. Wait for the shocking news…their revenues have taken a hit! I know, you never saw that coming, right?

The new report states that the Venetian and Palazzo have reported a 47% decline in revenues and a 6% drop in room revenue since the comps were eliminated. The main objective of the comp-cutting strategy was that these properties wanted to fill rooms with more cash paying customers than comped customers. I understand this logic. I see people all the time abusing the comp system and using offers that they should no longer qualify for. The casino business goes through higher and lower comping periods based on the business cycle, and for the Venetian and Palazzo, they felt that their convention business was strong enough to drive cash paying customers to their rooms, rather than just handing out free rooms to less than qualified customers in some cases. The one thing I don’t agree with is the way they went about it.

Back in February, LV Sands Corporation / Sheldon Adleson decided to eliminate all add-on comps such as free rooms or food and beverage offers. Only, they didn’t just stop sending offers, they actually rescinded offers that were already in players’ hands. Mr. Adleson also released this information to the media telling them, “We’ve essentially cut all of our comps except our most highly-rated players.  No more comped rooms. No food and beverage. No showroom credits. We’re selling rooms. We see it’s resulting in a substantial increase in cash income.” And that’s just fine, everyone understands the concept of a cash business vs. a comp business. But don’t rescind current offers. And DEFINITELY don’t discuss these decisions with the media. It’s almost as if Mr. Adleson was rubbing it in casino players’ faces…hahaha we don’t need your business! Well then, they will have to accept that players have choices when it comes to where they gamble, especially in Las Vegas, and I’m sure Mr. Wynn down the street would be happy to take in the extra players. In fact, he should start honoring room offers that were declined by Venetian and Palazzo and get some of those mid-level gamblers in his doors. Now, that’s a novel idea!

Really, when it comes right down to it, LV Sands is free to make whatever business decisions they see fit for their business. However, decisions made by a corporation should not alienate or anger their customers to the point that revenues are almost cut in half based on that decision. A smarter thing to do would be to honor the remainder of offers that were already sent out, and then start scaling back on free stuff.

What are your opinions on this matter?

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This blog is devoted to the gaming industry news and information - keeping you up to date on the happenings in the gaming world. My personal expertise lies in event planning and entertainment in casinos.

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