Why innovation and strategy need to be more than a philosophy
Recently I moved to Reno to assume the duties as CEO of Raving Consulting. As a kid, I remember visiting Reno with my family during the summer. It was a perfect distance from Southern California with a variety of activities to satisfy everyone. My dad loved to explore nature and take our Bronco off-road, and my mom loved (and still does) gambling. I remember spending the day visiting Carson City or out in the desert. At night we spent the evening at Circus Circus. My mom would gamble, and my dad would take us to the midway. I still remember how in awe I was of Reno’s famous “Biggest Little City in the World” sign.
Since then, the city has been through some tough economic times with the success of Indian Gaming in California, the recession, and the lack of investment from government agencies and property owners. Let’s just say, the lights on the sign had somewhat dimmed. Despite the tattered past, I have always considered this place, located in the high desert at the foot of the Sierra Nevadas, a diamond in the rough. And in the casino industry, it is the birthplace of Caesars Entertainment Corporation. How cool is that? As I began telling people about my move from the beautiful southern Oregon Coast to Reno, I was amazed by the responses about my new home base. It was not good, but as I asked questions, I realized they had not been to Reno for years. The perception was based on yesterday’s news.
Today, Reno has successfully courted and landed tech companies like Tesla, Apple, Intuit and recently, CAEK, a female-founded software technology company, along with many others. Gaming revenues recorded a 4.5 percent increase last year – on top of millions of dollars in reinvestment into the downtown and midtown areas. The Riverwalk along the Truckee River continues to see improvements and the historic post office building has transformed into an eclectic mix of trendy shops and restaurants. Eldorado Resorts is investing $50 million dollars into the renovation of its Circus Circus, Silver Legacy and Eldorado properties. The Peppermill, Grand Sierra and Atlantis continue to invest in new amenities and upgrades, while the Nugget is spending $25 million on renovations. The most impressive part of the transformation is that they are building on the character and charm of Reno’s history and modernizing the infrastructure and amenities to attract a more diverse clientele. It’s a brilliant mix of repurposed historic buildings with a modern flair. Non-gambling adventure seekers are finally being recognized, with niche lodgings like the Renaissance Reno Downtown Hotel (formerly the Siena Casino) that is betting on bocce ball enthusiasts; and the Whitney Peak Hotel is betting on climbing enthusiasts.
Kudos to the business leaders and developers who understand the value of this iconic city. Unlike other towns that demolish the “old” to create something “better,” this little city seems to appreciate the value of maintaining its unique history while optimizing it for the future.
Let’s face it; all jurisdictions are facing increased competition and aging properties, like Reno. Atlantic City is fighting back with internet gambling, which recorded a 32% increase in 2016. This won’t solve the problem of aging infrastructure, but it does offer insight into potential revenue opportunities for innovative operators.
As for Indian Gaming, the properties are just beginning to show the signs of age. At the same time, Tribal Governments have become over-dependent on casino revenues, leaving little for capital investment. Another twist is the sad fact that most CEO’s and Executive management teams are rewarded for results from the prior twelve months’ performance. Not to mention publicly traded companies whose leaders have more pressure than ever to produce monthly and quarterly gains. This creates a situation that discourages long-term planning and spending on unproven programs or non-revenue producing infrastructure that does not produce instant results, but could be beneficial to the business in the long run.
Adapting a quote from Ernest Hemingway, the decline “happens slowly and then all at once.” But when it happens, and it will, we have forgotten how we got into this position in the first place.
We see it every day, but don’t recognize it. When there’s a company in trouble – the General Manager and Slot Manager are pressured to get the “numbers up” now. However, little thought is given to the back story on all the missteps that led to the situation. Rarely, is the overall lack of performance the result of one individual or one decision. By making strategic planning part of your company culture and identifying it as a performance outcome, organizations can better anticipate business trends as opposed to reacting to them.
Remaining relevant will require operators to look outside the industry to understand consumer trends; to continually challenge the overall business strategy; to have a willingness to consider new technology; to create a capital budget that provides for infrastructure improvements and new development and a commitment to work with partners that share a common goal.
As for Reno, the opportunities are huge. The economic stars have aligned, as casino operators, technology companies, city officials, and investors work to create a Reno for the future. One that will appeal to the traditional gamers while enticing those seeking a culturally eclectic casino entertainment experience. My Reno adventure is just beginning, and so far my “diamond in the rough” is sparkling. (Did I mention they even have a new professional soccer team? Go Reno 1868 FC!)