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Player Loyalty Comps, While on the Rise Industry-wide,
See Slump in Atlantic City Casinos and Hotels

By Donald Wittkowski, The Press of Atlantic City, Pleasantville, N.J.McClatchy-Tribune Regional News

Oct. 07, 2011--LAS VEGAS -- One gaming executive said it is the way the casinos show their affection for their customers.

Each year, the gaming industry spends billions of dollars on comps, the promotional giveaways that include free hotel rooms, meals, flights, show tickets, slot play, and other freebies to reward patrons for their business.

In good news for customers, most gaming markets throughout the country will be increasing those comps as casinos aggressively fight for business in the shaky economy, panelists said Thursday during an industry conference.

"I don't know necessarily that we will cut back in the tough economy," said Kirk Houser, vice president of casino marketing for L'Auberge du Lac Hotel & Casino in Lake Charles, La.

The slumping Atlantic City market, however, is an exception. Figures compiled by the New Jersey Division of Gaming Enforcement show that the 11 Atlantic City casino hotels spent about $1.3 billion for comps in 2010, down from $1.4 billion in 2009 and $1.5 billion in 2008.

Casinos use comps to build loyalty among their best customers and to attract new ones, often one-upping their competitors by offering even more extravagant deals. Promotional giveaways can range from a few dollars of free play on a slot machine to lavish jet travel and high-roller suites.

"You have to hug and kiss your customers," Armen Yemenidjian, director of player development for Tropicana Las Vegas, said of comping.

As Las Vegas begins to recover from the recession, there are signs that casinos are getting even more generous with their comps, to further stimulate visits to the nation's largest gaming market.

"In my opinion, it is probably the highest it's ever been," Yemenidjian said during a panel discussion of casino marketing executives at the Global Gaming Expo.

Panelists said casinos spend an estimated 6 percent to 10 percent of their gross revenue on comps, which would amount to billions of dollars nationwide. Gaming executives characterized it as "player reinvestment."

"Reinvest more into customers who are loyal to your casino," Yemenidjian told the audience, comprised of casino marketing officials.

Comping has become so deeply ingrained in the gaming industry that customers look at it as "a bit of entitlement," said Joshua Kanter, a vice president with Caesars Entertainment Corp.

"Customers think of it as something they have earned," Kanter said. "That's just the reality we have created as an industry over a number of years."

Caesars Entertainment, the world's biggest gaming company and owner of the Bally's, Caesars, Harrah's Resort, and Showboat casinos in Atlantic City, has the industry's most extensive player loyalty program, called Total Rewards.

"In the industry, we call it the monster," Yemenidjian said of Total Rewards. "It's a really impressive program."

Casino executives in another panel discussion said Caesars Entertainment and other companies are making greater use of their loyalty programs to reward customers for their spending at nongaming attractions, such as the restaurants, nightclubs, and retail shops inside the casinos.

Nongaming revenue accounts for an estimated 26 percent to 65 percent of the overall revenue at large commercial casinos nationwide, said Suzanne Clayton, director of hospitality, gaming and travel solutions for SAS, a software development firm.

Clayton explained that nongaming attractions make casinos "sticky," meaning they are a way to get customers through the door and spending their money throughout the property.

"When they're done with the show, they'll probably go gamble," Clayton said.

One developing trend is to tailor loyalty programs to each customer instead of using a one-size-fits-all approach, said Bill Hornbuckle, chief marketing officer for MGM Resorts International, owner of MGM Grand, Bellagio, and other landmark Las Vegas casinos.

"Think most of what your customers care about, and then design a program around it," Hornbuckle said.

Contact Donald Wittkowski:



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