Las Vegas casinos ponder war marketing strategies

Thursday, Feb. 20, 2003 | 11:16 a.m.

As U.S. military officials devise strategies in the event of a war with Iraq, company chiefs in the nation's top tourism market are crafting strategies of their own to try and keep gamblers coming to Las Vegas instead of camping out in front of their living room televisions.

Major Las Vegas casino companies said this week that they are working on new marketing campaigns that would take effect should the country go to war with Iraq.

Some campaigns will focus on direct marketing pitches, such as mailers, that will entice gamblers with special offers at specific properties, the companies said.

More drastic moves, such as new brand advertising and dramatic cuts in hotel rates implemented after the terrorist attacks of Sept. 11, are unlikely under the current war scenario, some said.

"Our first response will not be to lower room rates but to use a wide variety of amenities to add value to vacation getaway offers, particularly in our drive-in and short-haul air feeder markets," said Debbie Munch, a spokeswoman for Park Place Entertainment Corp.

A variety of options -- from room rate cuts to marketing offers -- will still be put on the table for discussion, MGM MIRAGE spokesman Alan Feldman said.

In the near term, companies should expect to see a downturn in business if war breaks, Feldman said.

"There's no advertising campaign that's going to convince someone to travel who is afraid to travel," he said.

"Part of what precipitated the reaction to Sept. 11 is that it was so completely unexpected," Feldman said.

Still, he added, "with the nation on high alert, with the military well prepared ... the traveling public should have a greater confidence in travel even when we're at war. Having said that, not everyone is going to want to travel and they will have and probably should have other things on their mind."

Companies declined to reveal specific plans, saying their strategies will ultimately depend on the effect a war could have on potential customers. All bets are off on the scope, length and aftermath of the war, they said.

"It's going to matter exactly how things unfold," Rob Stillwell, Boyd Gaming Corp. spokesman, said.

Casino companies -- already faced with a sputtering economy that has slowed business -- learned to dramatically cut costs and beef up marketing efforts to recover from Sept. 11, analysts say.

Strip resorts also can be expected to extend better offers to regional tourists from drive-in markets such as California and Arizona and short-haul flight markets such as San Francisco and Denver to counteract a wartime slump -- a similar strategy used after the terrorist attacks, they add.

Positive trends could help companies through a short-term decline, though, as still-strong convention bookings boost mid-week room demand and "March Madness," the National College Athletic Association's March to April basketball championship, draws thousands of fans to town, they say.

"Las Vegas is doing a solid job in increasing its market share of conventions," said Joe Greff, a casino analyst with Fulcrum Global Partners.

Companies are likely to draw from their experiences surviving tourism declines after the Sept. 11 terrorist attacks and during the Gulf War more than a decade ago, experts say.

After Sept. 11, resorts learned that their business will eventually return, Greff said. Cutting rates may also have little effect.

"There's little they can do immediately," Greff said. "There's always going to be a spoiler that's going to be cutting rates to attract business. But cutting rates doesn't necessarily get people off of their couches."

Some new ideas may emerge today during a private conference call to discuss wartime marketing strategies hosted by the Las Vegas Convention and Visitors Authority for several Strip properties.

The call is intended to offer and receive marketing ideas from resorts aimed at boosting tourism, LVCVA officials said.

"We may piggyback off some of their ideas but we have to wait and hear what they have to say first," Mandalay Resort Group's marketing chief John Marz said.

Over the long haul, gaming companies may be better positioned to handle the threat of war than their counterparts in the traditional hotel industry, said Steven Kent, a casino industry analyst with Goldman, Sachs & Co.

That's because hotels rely more on business travel -- a segment that was especially hurt after Sept. 11 and by broader economic problems -- than casino-hotels, Kent said.

Casinos still have reason to be concerned, he said.

"About 70 to 80 percent of the travelers into Las Vegas are leisure-oriented and they may pull back if they're fearful of terrorism or from the fear of separation" from their families and friends during wartime, he said.

Some analysts report a slight slowdown in future bookings due to war concerns. But nothing has yet registered on the radar as a significant drop in business, they said.

Besides a threat of actual war, the federal government's recent terror alerts caused some minor cancellations on the international travel front, Deutsche Bank casino analyst Marc Falcone said.

Still, February is shaping up to be a good month for Las Vegas, with a well-attended apparel trade show in town this week amid a peak month for conventions, he said.

Future months are harder to predict because booking windows have become much shorter since Sept. 11, with groups and individual tourists becoming more cautious about spending, analysts say.

Some companies say the economy -- not the threat of war -- is taking up most of their marketers' time and attention.

"This economy has been going up and down and it's been difficult for the traveling public," Marz said. "It's not that people are over (the aftermath of Sept. 11), it's just not the deciding factor."

"The economy has not recovered prior to what it was before Sept. 11," Stillwell said. It's been a tough transition."

Companies say they will rely on their database of existing customers to help drum up business.

Mandalay Resort Group expects to roll out new direct mail and Internet-related pitches to customers in the event of a war but would stop short of introducing a full-fledged advertising campaign, Marz said.

Over the past year, Park Place has developed a companywide system that tracks customer preferences and can forecast future activity, Munch said. The company expects to use the system to tailor email and direct mail offers to customers, she said.

The company also will move ahead with plans to launch several new attractions next month regardless of a war with Iraq, including performances by pop diva Celine Dion at the new Colosseum theater at Caesars Palace, a celebrity chef restaurant at Caesars Palace and a restaurant and nightclub at Paris Las Vegas, she said.

Coast Casinos Inc. -- which markets to drive-in tourists but primarily caters to local gamblers -- isn't developing a wartime marketing plan.

The company didn't witness a significant drop in business after Sept. 11, other than a decline in hotel occupancy, Coast Casinos President and Chief Operating Officer Harlan Braaten said.

"Our view of things is more optimistic," he said. "And I'm not sure how you plan for something when you're not sure what the extent of the impact will be and how long the impact will be."

Coast isn't worried about more potential competition for locals or regional visitors from Strip properties in the near-term, he said.

"We compete for them today and if it gets tighter we'll compete for them then as well," he said. "In the end it becomes a pricing challenge and a comfort challenge. People are comfortable with places they've come before. We're prepared to deal with that."

Station Casinos Inc. -- Coast's primary competitor in the locals market -- also isn't working on a new strategy.

"There's not a lot you can do (to anticipate) a war," Station Casinos Chief Financial Officer Glenn Christenson said.

Christenson said companies should expect some "CNN effect" in the near-term as customers stay glued to the news.

The company saw some effect on business as Strip employees were laid off after Sept. 11, he said. A significant number of Station customers work at casinos, though the company can't say how many. After the Gulf War, the company's only property at the time -- Palace Station -- had to pump up marketing pitches to fill rooms with drive-in visitors, he said.

The Culinary Union, which represents thousands of workers at both Strip and downtown casino hotels, will also be watching events as they unfold.

The union has developed a contingency plan should there ever be the kind of widespread layoffs that occurred after Sept. 11. The plan aims to maintain workers' four-month health care coverage after termination and will pressure companies to ensure that layoffs are reasonable and don't end up hurting business along with the workers themselves, the Culinary Union's secretary-treasurer D. Taylor said.

The union criticized the layoffs, arguing that the cuts were too drastic and led to sub-par service for customers who soon returned to Las Vegas. The union estimates that about 1,500 of those people still haven't found work.

"I hope that the industry would have learned from the panic reaction after 9-1-1," Taylor said.