Several years ago, when I was Vice-President of Marketing at Harrah’s Casino and Hotel in Joliet, Illinois, we struggled to host profitable VIP Special Events and Entertainment. At that time, the prevailing wisdom suggested the reason for this shortcoming was a lack of capital investment in an adequate ballroom or showroom to host such events. We didn’t have the space to host enough Gamblers to generate the incremental revenues needed to overcome the added production expense associated with a show or a party targeting our VIP database.
After multiple disappointing break-even performances, I concluded that no matter what we did, we just couldn’t make these events work. In fact, I began to eliminate such programs from my marketing calendar and started replacing them with high-volume fixed cost promotions (By the way, these worked well against mid-level guests, but that’s a story for another article). My thinking was that I would use Special Events and Entertainment four or five times a year, probably once or twice per quarter, as a “thank you” to our most frequent and valuable guests for their loyalty. This new approach relieved me of any stress or expectation of making much, if any, money from these programs. The only problem with this plan of mine was that our VIP guests really hated it. I learned very quickly through phone calls, emails, letters, and in- person conversations that Gamblers love being treated to dinner parties, exclusive invitational giveaways and occasional headline entertainment.
Finally, one afternoon, as I was reviewing the financial performance of a recent Special Event, I noticed that the Average Daily Worth of the guests attending the event was near the bottom of the theoretical criteria we selected for the event. I went back and looked at several others and noticed the same thing. I immediately realized our profitability issues were not about ballroom space, menus we had selected for our dinners, or type of entertainers we had hired. In fact, it was completely about improper yield of very limited Special Event inventory. Said differently, the low end of our VIP base was quickly calling and filling the reservations for our Special Events and Entertainment and effectively locking out our higher value VIP’s that tended to not call or call very late in the reservation cycle.
Taking this a step further, let’s assume you booked an entertainer that cost $50,000 with a showroom that holds 1,000 guests. That means each seat has an actual cost or value of $50. Using this in an event pro forma, you must be very selective about who you invite and, more importantly, what priority you place on their reservation.
Here are five tried and true methods you can start using today to improve your VIP Special Event and Entertainment revenue and profitability:
Audience Criteria Selection
When determining audience criteria for a Special Event or Headline Entertainment, you should first determine what kind of incremental value you need to achieve to make the event worthwhile. First, start with a simple event pro forma. You may want to start by accounting for all of the expenses associated with the production of the event. This may seem like a very common sense thing to do but believe me, I’ve seen many Special Event pro formas that weren’t fully loaded. I suggest teaming with your Finance Department the first few times to make sure you have fully accounted for all expenses. Include a good mix of guests that qualify on daily gaming value and cumulative gaming value. How you determine the composition of that mix will be determined by the ROS you are targeting for your event or show.
Selective and Proactive Customer Contact
Before mailing the invitation, provide your highest-worth audience the opportunity to book first. In most cases, very high value guests do not respond to standard casino invitations, so try contacting them directly before opening your reservation block to the lower value guests in your criteria model. This may be done through email, text, and telemarketing—or even social media. Whatever your customer contact strategy, giving the higher value guests first shot at your limited event or entertainment inventory will only help your yield.
Stratified Invitation Mail Schedule
When you send your invitations through the mail, make sure to drop in waves based upon guest value. For example, mail the $500+ ADW segment before the $300-$499 segment. Allow the invitations to arrive in home before mailing the next tier. This will give more valuable guests first shot at those limited tickets.
Build Reservation Blocks
Another great way to increase Special Event and Entertainment yield is to build reservation blocks. These blocks will ensure only a predetermined number of guests from each of your criteria segments is allowed into the event. When using this tactic, make sure you don’t over invite any single segment. Nothing makes customers more unhappy than calling to reserve for an event the day they receive the invitation and being told it is sold out.
Be Prepared for Last Second Requests
Always keep a few tickets, party reservations and hotel rooms in your “hip pocket.” Inevitably, some of your best guests will suddenly have the weekend of your Special Event free and will ask to come at the last minute. If you are prepared, you can always accommodate those special players.
Special Events and Entertainment can be tricky to manage, but if you plan well, space them correctly on your marketing calendar and invite the right audience, not only can they be fun for your guests but highly lucrative for your casino’s bottom line.
Stephen R. Marshall is a Senior Vice President at The Fine Point Group. You may reach Mr. Marshall at email@example.com with questions or comments.