With a post-COVID rebound of the Las Vegas market serving as a catalyst, a handful of casino hotel companies are making considerable progress in their recovery efforts as well as positioning themselves for future growth.
During BITAC Casino Resorts Live 2021, several executives weighed in on the current state of the segment as part of a panel discussion entitled “Back In The Game: Casino Hotels Continue To Rebound From Pandemic, Downturn.”
Richard Bosworth, CEO, Virgin Hotels Las Vegas—which reopened earlier this year after being converted from the Hard Rock Hotel & Casino—was especially bullish on the market fundamentals of Las Vegas and its future.
“Las Vegas has probably had the lowest percentage of new supply of any major market in the U.S., but yet the demand increases in Las Vegas for gaming and for integrated resorts is going to be at an all-time high. I think it’s probably one of the safest and most dynamic investment communities for hospitality. Las Vegas is roaring back,” he said.
David Hoelzer, corporate vp, purchasing, Station Casinos, reinforced the point.
“I would really echo that. We’re reinvesting, we have some big construction projects planned for the next year-and-a-half or two years. The valley keeps growing dramatically so it’s been a very stable economic environment for us,” he said, adding there are some macroeconomic headwinds to keep an eye on such as inflation costs.
Phil Minichino, chief procurement officer, Foxwoods Resort Casino, noted his company is also investing in growth while hedging against some of the existing supply chain issues.
“We actually have a very aggressive capital budget this year and next year. We’re trying to get things approved now that we might be doing for summer projects. That way we can get funding established for it and put the orders in so we can get products, because if we don’t do it now we might not get it until fiscal year 2023,” he said.
However, Roger Bloss, President, Alternative Hospitality, pointed out that getting funding for projects has become considerably more difficult in today’s environment.
“Finding the money is almost impossible right now. The lenders have gotten tight and said ‘hey you got to pick these brands and you got to have this amount of debt to equity.’ That’s the most difficult part for us because this is a total change to where we were pre-COVID,” he said.
Bloss further noted when it comes to new construction he’s had to adopt a “cost-plus” model with general contractors because of the rapidly changing material prices.
Kevin Ball, vp, purchasing, Affinity Gaming, also acknowledged some of the challenges associated with financing projects.
“You put together a budget for a project, the project finally gets approved and that budget isn’t worth the paper it’s written on because of inflation prices, freight, and things like that. What I’ve talked with my CFO about is ‘fund fast.’ Approve it quickly and get the orders in so you don’t have to have a 50 percent contingency at the end of your budget for your project,” he said.
Bosworth, meanwhile, acknowledged some of the changing demographics within the casino market. “We have seen a complete shift in our market segmentation demographic and clientele,” he noted, adding that was a key factor in the decision to rebrand the hotel.
Bosworth continued, “There’s got to be activation on the gaming floor and quite frankly we’re still working on that. It has to match the activation that you’re feeling in food and beverage, that you’re feeling in entertainment and that you’re feeling inside of a guest room. It has to be a full ecosystem and once you can nail down that ecosystem and get that type of an experience and vibration on the gaming floor, I think then it comes full circle,” he said.
A major component of that shift is technology, particularly the emergence of online gaming.
Ball noted the company just activated to its own proprietary platform to generate additional revenue, but he added there is still plenty of work to be done.
“I think it’s a new revenue driver for the industry. The industry needs to become more innovative and not treat it as a static tool. We need to treat it as something that’s living and breathing and continually try to improve upon it,” he said.
Minichino, for his part, noted that in addition to further automating some of its internal systems, Foxwoods has been focused on cashless transactions.
“The youth of today don’t carry cash with them. They’re looking to swipe a card so they can go and gamble at a table,” he said.
Within technology, social media continues to take on increased importance, particularly with the potential for COVID to potentially reduce in-person visits to casinos, according to Hoelzer.
“Social media has been a huge push for us. We’ve really revamped that entire program for our company. We’re trying to re-engage younger generations and we’ve put more focus on generating content for platforms like Instagram. We’re just trying to further engage with our guests whether they can or can’t come into our facility so we have that ongoing conversation with them,” he said.
Finally, Bloss maintained that casino hotels have made considerable progress in recent years when it comes to rates, which has prompted increased hotel development in the surrounding areas.
“For the first time in Las Vegas, casino hotels have gotten their room rates up to a position now where you’ve seen multiple hotel companies building Hilton Garden Inns, Residence Inns, Hampton Inns and products like that. The rates are now up to the point where owners can make money off of hotel assets that are limited-service and don’t involve gaming and allow casino hotels to provide all the entertainment,” he said.