Atlantic City Reengineering

  • Casino-bound buses made up a significant part of the traffic  entering town on the Atlantic City Expressway in 1998.

After overworking the word change for the last couple of weeks, it was time to find another word to describe the evolving world of gaming, in this instance the evolving world of Atlantic City gaming; so today it is engineering.  Atlantic City is as hard pressed as Detroit to find a solution to its declining industry and desperately needs  engineering, that is to find a new business model; Detroit has the car makers in Asia and Europe to thank for its deep economic decline, Atlantic City has casinos in surrounding states, mainly Pennsylvania to thanks for its struggles.

One of the biggest challenges that Atlantic City has had over the years is its dependence on day-trip bus customers.  It never was the most profitable model, as the casinos spend too much on each customer and the competition between the casinos was at times brutal as they outbid each other for the bus customers. At one point, bus customers represented nearly half of the annual visitors to AC; in 2009 it had dropped to 13 percent.  There is good news and bad news to the drop in bus customers; first the bad news, the buses that used to go to casinos in Atlantic City now take those same senior citizens with their average $50 each to spend for the whole day, including meals, presents, gambling and anything else that strikes their fancy, to casinos in Pennsylvania; the good news is the casinos in Atlantic City started to learn years before the casinos opened in Pennsylvania to use data-base marketing to replace bus customers with higher spending customers. [Press of Atlantic City]

Data-base casino marketing is hardly new to the casino industry, it started in the 1980s, but really gained steam when slot machines were linked electronically and slot loyalty clubs became possible.  Now casino loyalty programs are ranked with airlines, credit cards and other major programs; in fact, Harrah’s often makes national headlines with new technology or uses of customer loyalty programs to drive revenues.  Harrah’s has the largest program in the industry and all of the Harrah’s properties operate within the same program.  Just two weeks MGM-Mirage admitted that Harrah’s Total Rewards program with its 30 million customer base enabled Harrah’s to get a higher yield from its hotel rooms than MGM.  [Las Vegas Sun] MGM is now going to try and create a program like Total Rewards that is system-wide and like Harrah’s would bring “qualified, good” customers from everywhere to Vegas. The program not only helps fill rooms, but produces higher casino revenues per occupied room than rooms booked through other systems.

Slot clubs, loyalty programs or whatever else they are called are not going to be the magic cure to what ails Atlantic City, but properly used they will certainly help the AC casinos maximum the opportunities that do exist in these times of intense and increasing competition. And while we are in Atlantic City, the Claridge is spending $50 million to upgrade its facility. [Press of Atlantic City] The Claridge opened first in 1929, now that is a property with great sense of timing.  It became a casino in 1981.  With $50 million management is just trying to stay in the game; since 2001 it has been wrapped into Ballys and is owned by Harrah’s so at least you know management understands data-base marketing.


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May 2010
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