Ch. 11

Report
Introduction to Hospitality, 6e
and
Introduction to Hospitality Management, 4e
John R. Walker
Gaming Entertainment
Chapter 11
The Casino Resort: A Hospitality Buffet
• Twenty of the thirty largest hotels in the world
are casino resorts on the Las Vegas Strip
• Today, many casino resort presidents and key
executives have come up through the lodging or
food and beverage side of operations
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
What is Gambling?
• Gambling is the act of placing stakes on an
unknown outcome with the possibility of securing
a gain if the bettor guesses correctly.
• To be considered gambling, an act must have
three elements: something wagered (the bet), a
randomizing event (the spin of slot reels or the
flip of a card), and a payoff
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
What is Gambling?
• There are two basic categories of gambling:
Social gambling and mercantile (or
commercial) gambling.
• Social gambling is conducted among individuals
who bet against each other
• In mercantile or commercial gambling, players
bet against “the house,”
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
What is Gambling?
• The house edge is what makes casinos possible
• The house edge allows casinos to offer their
customers honest games, fairly dealt, and still
remain in business.
• The house edge is defined as a mathematical
formula that allows the ‘house’ to keep a small
percentage of every bet made by a player. The
player may have some ‘luck’ in the short run but
the house ‘advantage’ usually prevails over the
long run.
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
What is Gambling?
• The handle is the total amount of money bet at
a game.
• The win is the handle minus the money paid out
on winning bets—essentially, what the casino
keeps.
• The hold percentage is the percentage of the
total handle that is retained as win.
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
What is Gambling?
• Just because the casino department is reporting
a net loss for a shift does not necessarily mean
that the department is inefficient or incompetent;
it may just be an expression of volatility. Over
time, gaming wins will tend towards their
historical average (house advantage).
• Because of volatility, even a busy casino can
end up in the red for a shift or even a weekend if
one high-stakes player has a run of good luck.
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Comps: A Usual Part
of an Unusual Business
• Comps are complimentary goods and services
offered to casino patrons in order to attract their
business
• Comps are distributed as a usual part of a
casino’s operation.
• The value of comps varies; generally speaking,
higher-producing players are given higher-value
comps
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Comps: A Usual Part
of an Unusual Business
• Casinos, with thousands of guests on any given
day, rely on customer loyalty programs to track
patron play
• Casinos use the information they gain about a
player’s gambling patterns to offer him or her
comps, based his or her expected levels of play.
Most loyalty programs have tiered rewards
structures, giving patrons an incentive to play
more and unlock more rewards.
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Types of Casino Operations
• Nevada-style gaming tavern, which is a typical
bar and restaurant that has less than sixteen
electronic gaming devices
• Stand-alone casinos usually consist of only slot
machines
• Indian reservation may be bingo parlors in
prefabricated buildings to fully functional casino
resorts
• Riverboats are usually permanently moored
casinos with F&B facilities, and a hotel
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Components of Casino Resorts
• Destination resorts, such as those found in Las
Vegas, are centered on casinos that have
several types of games available:
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–
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Slots
Table games (21, craps, roulette, baccarat, etc.)
Race and sports books
Poker rooms
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Components of Casino Resorts
• In most parts of the United States, slot machines
produce the bulk of the revenue
• Among table games, blackjack is most popular
nationally
• Casino resorts also include the following
components:
–
–
–
–
–
–
Lodging
F&B
Entertainment
Retail shopping
Convention facilities
Nightclubs
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Evolution of Gambling and Casinos
• Gambling is among the oldest of human
behaviors
• Purpose-built dice have been discovered at sites
dating back to 7,000 years ago
• Casino resorts, as they are currently operated,
are much younger, dating back only to 1941
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Evolution of Gambling and Casinos
• By 1910 gambling had been outlawed in the
United States
• In the midst of the Great Depression, in 1931,
Nevada legalized gambling in order to increase
tourism
• The El Rancho Vegas, was the first casino resort
on what would become the Las Vegas Strip
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Evolution of Gambling and Casinos
• In the 1970’s casinos were being purchased by
corporations, integrating them into the national
economy and initiating new regulatory scrutiny
• In 1976, New Jersey voters legalized casino
gambling in Atlantic City
• Riverboat gambling debuted on the Mississippi
in 1991
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Evolution of Gambling and Casinos
• In the 1987 Cabazon decision, the Supreme
Court affirmed that if a state allowed betting on
bingo or card games, Indian tribes could offer
these games without limits imposed by state
regulators
• Today, there are more than 200 Native
American tribes operating casinos in more than
30 states with revenues of more than $25 billion
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Evolution of Gambling and Casinos
• American-run casino operators have found that
Asia is an even more lucrative market for
casinos than the United States.
• Both Macau (2004) and Singapore (2010) have
become casino powerhouses
• Since 2008, Macau’s casino industry has
become a world-wide leading gaming center
with increasing revenues surpassing Las Vegas
by nearly 400%
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Working in a Casino Resort
• Hotel operations:
– Much like the career opportunities in the full-service
hotel industry, with the exception that food and
beverage can be a division of its own and not part of
hotel operations
• Food and beverage operations:
– High-quality food and beverage service in a wide
variety of styles and concepts
– Some of the best foodservice operations in the
hospitality industry are found in gaming entertainment
operations
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Working in a Casino Resort
• Casino operations:
– Gaming operations
– Casino service
– Marketing
– Human resources
– Finance and administration
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Working in a Casino Resort
• Retail operations:
– Increased emphasis on nongaming
sources of revenues
– Gaming entertainment business demands
an expertise in all phases of retail
operations
• From store design and layout to product
selection, merchandising, and sales
control
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Working in a Casino Resort
• Entertainment operations:
– Because of the increased competition, gaming
entertainment companies are creating bigger
and better production shows to turn their
properties into destination attractions
– Production shows have climbed into the multimillion dollar range, with special entertainment
venues built for superstars
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
The Mirage Effect
• Since the 1990s rooms have become a major
revenue center
• Gourmet cuisine was introduced in 1992 when
Wolfgang Puck opened Spago in Caesar’s
Palace
• The quality and cost of entertainment has
skyrocketed
• Full-fledged malls inside casinos have seen
retail spending climb
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Sustainability in Gaming Entertainment
• Gaming entertainment companies continue
adapting their operations and practices to fit
“green” standards.
• Many well-known companies in gaming
entertainment are leading the way to establish
sustainable initiatives
• Harrah’s Entertainment Inc. has undertaken a
sustainable initiative in several areas of
operation, including energy, waste and water
conservation, as well as climate control
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Career Information
• The growth of the gaming industry has resulted
in a variety of new job openings.
• People choose to work in the industry because it
is known to place people first, whether they are
employees or customers
• Most careers include impressive benefits
packages and offer many career advancement
opportunities
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
Trends in the
Gaming Entertainment Industry
• Gaming entertainment dependent less on casino
revenue and more on room, F&B, retail, and
entertainment
• Gaming and lodging are converging
• Continued scrutiny by government
• Exceptional service will drive the entire industry
• Continued improvement in management career
opportunities
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved
The End
Introduction to Hospitality, 6e and Introduction to
Hospitality Management, 4e - Walker
© 2013 by Pearson Higher Education, Inc
Upper Saddle River, New Jersey 07458 • All Rights Reserved

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