Gaming executives face technology issues

Kevin Rademacher

Thursday, May 29, 2003 | 10:55 a.m.

As the supply of land along the Las Vegas Strip dries up, gaming operators must grow revenue by maximizing existing resources.

Glenn Schaeffer, president and CFO for Mandalay Resort Group, said Wednesday that technology, when managed properly, plays a key role in that effort.

"You only do well in corporate management with that which you can measure," he said in a keynote address to the Gaming Technology Summit in Henderson. "That is why (information technology departments) have always been a stepchild ... You have to put the head of IT at the table with other business unit managers."

Schaeffer said technology departments must be involved in serving the overall business plan. In the gaming industry that means putting technology to use identifying and reaching customers.

From Schaeffer's perspective, that means collecting information and using it to attract customers to the Mandalay Mile, the portion of the Strip that includes the Excalibur, Luxor and Mandalay Bay resorts.

"As we talk about how IT fits, we're going to talk about how it relates to capturing the entire spending budget of our customers," he said. "Get them into the Mile and don't let 'em out ... On a corporate level, I don't care which cash register I get your money in, as long as it's mine."

Loyalty programs have been a key factor in keeping those customers close to Mandalay properties, and similar programs are at work in casinos across the Las Vegas Valley.

The insight into customer activity has changed the way Mandalay approaches its business, Schaeffer said. Five years ago, he said the company lost $20 million in its restaurants, giving away food to attract customers. In 2002, he said the company made $20 million from restaurants. A similar shift happened with entertainment.

"If you can't afford to eat in my casino, you're probably not a good customer," he said. "But you have got to know who the good customers are. That's how (technology) fits."

The company has also used improved technology to monitor the impact of room rates and occupancy levels, Schaeffer said.

"If you are going to manage profits, occupancy can only go as high as 100 percent, but room rates are infinite ... When we get to 92 percent (occupancy) we raise room rates," he said. "You know what happens? You knock out the lowest bidder and get a better quality customer."

That better customer will pay more for food and entertainment as well as rooms.

The company also has managed to cut costs with the use of technology, particularly through Internet booking. Mandalay's Strip properties are seeing 20 percent of their rooms booked online. The shift to online bookings has allowed the company to cut reservation staffing by 30 percent, Schaeffer said.

Maximizing resources will be important as the pace of growth has slowed on the Strip. When new properties were going up at a rapid pace in the 1990s, the rooms became the attraction, Schaeffer said. Now growth has slowed and room inventory is expected to grow by just 2 percent over the next five years.