Revenue Management Strategy
Focus on guest value gives the advantage to the house
|September 7, 2006 - Remember when casino hotel rooms were either free
or available for less than the price of a premium martini? Or when
lavish casino buffets were $5 and show tickets were free to nearly anyone
known to the property? Those days are gone forever.
For years casino hotels offered comp rooms under wildly generous conditions to attract guests so they would patronize the property’s gaming floor. The hotel room was simply a convenient place where gamblers went to relax after playing the tables or working the slots. Anyone who has stayed at a casino hotel in Las Vegas or the other gaming centers lately knows things have changed. The reason? Professional revenue managers – including Lyra Beck at Boyd Gaming – are implementing proven yield strategies and sophisticated casino revenue management technology to transform casino hotels from loss-leaders to solid profit centers.
“Our goal is to put the right guest in the right room, at the right time and at the right rate,” said Beck, Boyd Gaming’s corporate director of hotel yield and teleservices. “We reduced comp expenses 35 percent and increased cash revenue four percent by updating our strategy and automating our operation. revolutionSM, a specialized revenue management system from The Rainmaker Group, pulls in a guest’s gaming value from the casino side and factors in forecasted property demand and other variable influences to set room rate and comp availability.” Beck explained the new system forecasts a guest’s value based on their play history – or in some cases, lack of play history – and calculates availability status for Boyd according to a guest’s total value.
When reservation agents receive a call, they type in the guest’s name, player identification (if any) and dates, and the system instantly provides the appropriate level of comp or room rates for those days at the requested property. “There are no spreadsheets; the system makes the recommendations and our yield managers review them for appropriateness. We do not see the math involved in our system’s rate setting and forecasting process,” explained Beck, “but as business people we are well qualified to evaluate the forecasts and recommendations for acceptance or modification. We are in the information and analysis business, not the IT business. Our system handles the calculations quickly so we can focus on fine-tuning strategy as often as necessary.”
Boyd Gaming also uses the system’s forecasts to help align mail campaigns and other promotions more precisely with demand conditions. “Our yield managers are like orchestra conductors who work from their forecasts to recommend which guest types we want to attract to our properties during a specific period. Since we installed the revolution system in early 2006, we have reduced stay-no-play and other low-profitability customers by 23 percent.”
Boyd Gaming acquired the Harrah’s Shreveport in May of 2003 and renamed it Sam’s Town Hotel and Casino. Once the property was added to Boyd’s portfolio Beck moved quickly to install an effective revenue management system. “We opened Sam’s Town in Shreveport starting from scratch with a manual yield management process. But once Rainmaker’s system was installed it was an easy transition.” Beck taught her team that revenue management was not about technology, but about people following recommended best practices – which helps Boyd balance its hallmarks of customer value, loyalty and satisfaction with the bottom line. “Revenue management is a way of doing business, not a computer system. The system helps Boyd increase profitability by knowing the value of a guest and enables us plan for the way demand will materialize. I expect to install it in all our properties.”
Lyra Beck knew she wanted to be in the hotel business in the ninth grade. She worked her way through the University of Nevada Las Vegas at a reservation center and was hired by the Mirage after college, then later moved to the New York, New York property when it opened. She has held positions with the largest hospitality gaming companies in the world. “Boyd is different from the other companies I’ve worked for. We value our customers and balance guest loyalty and satisfaction with the bottom line. In order for guests to enjoy themselves when they are at your hotel they need to feel they are receiving good value for the price they pay. Boyd understands this.”
About Boyd Gaming
About Rainmaker Group
|Also See:||The Rainmaker Group to Share Expertise at Revenue Management and Pricing Conference; Rainmaker Executive VP, Tom Walker, will speak at EyeforTravel Revenue Management and Pricing in Travel 2006 Conference / August 2006|