Techniques for Maximizing Hotel Rooms


Drive more play in your casino through yield management

Rooms as a tool to increase play in the casino is becoming critically important as operators maximize rates based on demand and measured against player worth on the floor. Simply put, no longer are we just trying to maximize room rates blindly. By taking a holistic approach to the value of each room, while leveraging play, we can make smarter decisions about “whose heads are in our beds.”

The classic casino example is when the hotel is sold out and a host wants to put a player into a room or suite, displacing a cash guest. Casino hoteliers know that this is a good decision as the host will justify the player’s theoretical value as a much greater worth to the property.

Today we look beyond a reactionary decision on rooms and move towards a strategic effort to “incent” tiered players to stay, knowing their value in advance.

By definition, “Yield” is the technique commonly associated with airline seat rates where the earlier you book, the lower your confirmed rate. As demand increases for a finite number of available seats, the rate becomes more expensive with the hopes that they “yield” the highest average rate for a sold-out flight. Unsold hotel rooms, like unsold airline seats, are the most perishable commodity, as you can’t sell last night’s rooms the next day.

Reservation Managers have now become Yield Managers, often with technical skills in writing and using computer modeling with complex algorithms that signal when rates are open, at which level and when they should be closed out to maximize the highest possible revenues based on diminished or compromised supply and a strong demand.

By understanding the tiered value of your players, offers or rates can be designed to entice them to stay in your property when supply is open. When occupancy is high, these offers would be closed to all except the highest worth player.

Understanding your players is the first and most important step. Random attempts at guessing what they want will just waste money and frustrate them. Ask them. Talk to them. The best examples of offers that work are from casinos who know their players. They host events, get to know their preferences, track usage, and evaluate every campaign.

Enticing offers do not necessarily mean that rates would degrade their points, but rather give them a value not available to others below their tier. This is used to build a base of rooms business early when the rates would normally be low and fill the base with people who have the propensity to game, rather than those who stay with you just for the other amenities. The earlier you can fill a base of business with players, the easier it is to raise rates for non-tiered guests who are willing to pay more and won’t have much effect on coin-in.

These offers can be simple:

  • 45-15 days prior to specified date – 30% / 20% / 10% of Best Available Rate for three top tiered players. Rates close inside two weeks of arrival or based upon fill of house availability.
  • FREE NIGHT STAY – based upon a three-night stay and the first two nights at Best Available Rate at time of booking.
  • Bundled stay – a packaged rate where multiple services are included in the package, some of which are lost leaders and the individual pieces could not be purchased for the same price as the packaged price. This helps with generating trial for other operating areas that are less utilized, like the spa, a specific F&B outlet, retail or other entertainment offering.

Things to avoid:

  • FREE PLAY! I know there are many casino properties that use free play to entice players, however I have found that this only grows coin-in and does not necessarily grow significant revenue. It also tends to program the player only to select an offer if he or she gets free play.
  • Running offers too frequently or in a set pattern. The idea of an offer is to change behavior during a specific, needed period of time.
  • Assuming that it was successful because you increased your bookings. It is essential that following an offer there is an evaluation of performance. Understanding who selected the offer, what they spent, when they booked and their casino patterns are important factors for what future offers you might want to create.

The success of promotions requires great cross-communication between casino marketing, player development, gaming management, and the hotel yield team. There are many more examples of successful offers and promotions that yield hotel rooms to drive more play in your casino.

Be creative and make sure that you are customizing the offers for what your players want.

Measure success and fine-tune following each offer. You will see an increase in play over time.

Brett L. Magnan