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MGM Mirage, Harrah’s finding revenue in rewards programs
Monday, May 10, 2010 | 2 a.m.
GETTING UP TO SPEED
Harrah’s Entertainment operates Total Rewards, a loyalty program it’s leveraging, for example, to reap profits at properties that weren’t as successful under previous owners. MGM Mirage CEO Jim Murren said last week he’s working to boost his company’s players club to correct the “competitive disadvantage” it’s at in regard to customer rewards.Sun Archives
- No gambling required: Harrah’s widens rewards program (4-27-10)
- Harrah’s secret: Cut costs, back to basics (3-5-10)
- Harrah’s debt gamble (2-15-10)
- Harrah’s gets OK for Planet Hollywood purchase; job cuts planned (2-3-10)
- Harrah’s to take over Planet Hollywood management (1-15-10)
- Harrah’s buys Planet Hollywood debt (9-15-09)
- Harrah’s expects annual savings of $500 million (3-17-09)
- Harrah’s reports loss, says LV properties hit hard (3-13-09)
- Harrah’s announces plan to reduce debt burden (3-4-09)
- Strip building boom, buyouts were ill-timed, and many see more pain in ’09 (3-1-09)
- Harrah’s wants class-action suit over debt swap dismissed (2-27-09)
- Harrah's hit with class-action lawsuit over debt plan (2-16-09)
- Harrah’s seeking $740 million from credit line (2-13-09)
- Harrah’s makes cost-cutting moves (2-12-09)
Last summer, MGM Mirage sent offers to Las Vegas residents who had previously gambled at the Bellagio, offering them a free stay at the resort.
Business was down, so the hope was that these local guests, much like tourists, would spend money on other attractions during their stay.
But the offers had some locals scratching their heads. Many don’t spend much time on the Strip, and they have homes to return to, so they would have preferred free buffets or some other comp over free rooms.
Residents didn’t get free room offers from Harrah’s Entertainment resorts such as Caesars Palace. It has maintained a high occupancy rate in the recession in part because of a corporate loyalty program that rewards people who gamble at Harrah’s smaller casinos across the country with free rooms at major casinos in resort cities such as Las Vegas. Offering hotel rooms to locals would not be a default method of operation for Total Rewards, the high-tech loyalty program operated by Harrah’s. The program uses complex algorithms to sort names by spending habits and preferences to determine what freebies and discounts customers would most prefer. Locals would be less likely to receive free rooms than tourists would, and might instead get gambling offers or meal discounts.
The end result of all this sorting and filtering is dramatic.
As the top executive of Harrah’s competitor MGM Mirage publicly admitted last week, Harrah’s properties generally earn a higher profit on each occupied hotel room — the total amount spent at the property by each customer — than hotels owned by MGM Mirage.
Jim Murren
Not having a comparable loyalty program “has been a competitive disadvantage for this company in the past decade,” MGM Mirage CEO Jim Murren said Thursday in conjunction with the company’s first-quarter earnings report.
While his company has a players club across its many properties, it has lacked the technology to sort information on gamblers’ spending habits and personalize offers accordingly, Murren said.
Instead, the company has relied on mass mailings, which isn’t a particularly efficient or practical method of giving customers what they want.
MGM Mirage also expects to reward customers for money spent on resort offerings besides gambling. Harrah’s recently expanded its Total Rewards program to include rewards for nongambling spending on hotel rooms, meals, retail purchases and entertainment.
While giving Harrah’s credit for offering a superior loyalty program, Murren also took several swipes at his chief competitor, saying the company’s marketing engine has managed to boost earnings at properties with fewer amenities than MGM Mirage properties.
“Many of our competitors with far less quality (hotels and amenities) have done more with less,” Murren said. “It’s time to do more with what we have ... we have the highest quality resorts in this industry and the most diverse offerings.”
Indeed, while Harrah’s is the country’s largest and most geographically diverse casino company, MGM Mirage owns or operates the largest chunk of Strip casinos, not to mention more restaurants, bars, showrooms, pools and nightclubs. The company also owns both of the Strip’s major arenas, so it controls some of the Strip’s biggest entertainment acts and sporting events — each a potential marketing opportunity, and an occupied room, if the price is right.
In August, the company promoted Mandalay Bay President Bill Hornbuckle to the new position of chief marketing officer to oversee the effort to develop a more advanced and uniform loyalty program.
MGM Mirage has since hired marketing and technology managers from outside the casino industry and signed contracts with consultants to assist.
Similarly, Harrah’s — taking its cue from airlines and retailers with more advanced customer-tracking software — imported talent to help the company revamp its Total Rewards program years ago.
The recession is pressuring companies to find new ways of making money that they had the luxury of overlooking, or postponing, when times were good. Also, the profit potential of Total Rewards has become more apparent to competitors in recent years as Harrah’s has added to its casino empire. One example is Imperial Palace, a modestly profitable casino that is generating tens of millions more for Harrah’s than it did under previous owners, largely because of Total Rewards, according to industry experts.
Likewise, MGM Mirage is expecting to reap a windfall by simply packaging more appealing offers to existing customers. With a database of more than 60 million people, the company has a lot to work with.
If the company’s new data-mining tools work as expected, locals who drop a few dollars in a slot machine at Bellagio shouldn’t necessarily expect to receive a free room — though they might be offered something more suitable.
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Until there is a Monopoly break up of the big three here in Las Vegas, competition will remain a low priority, thus value offerings at a minimum, and customer service basically non existent. In the gambling business, each customer requires different levels of attention based on their play. Free rooms and food are the lowest tier of comps which should be extended to most players who play heavy on the dollar and five dollar machines. The high rollers require personal attention, but what am I saying all this for, the corporate monopoly has to change first before anything is gonna happen.
In regards to Harrah's, I contacted them last month and requested that I be taken off of their mailing list. I realize that we are probably considered good customers but I just couldn't tolerate the amount of correspondence I was recieving everyday. I was probably recieving 3-4 mailers a day.
I refuse to gamble where Loveman,Batjer and Jones are rewarded in any way.
3-4 a day? Doubt it...
Harrah's Total Rewards program is the best. I visit Las Vegas 2-3 times a year and have never paid for a room. I love this city!!!
Viva Las Vegas.......
IMC (integrated marketing communications) is a relatively new field that encompasses mass marketing using several platforms of data mining and dispersion social media is one tool that focuses on advertising.Concierge services in conjunction with Hosts and Players Club reps round out the human component.The wealth of information stored in the databases with one unifying mainframe a goldmine in terms of personalizing and targeting the needs and desires of individual.Linking with outside sources such as the LVCVA and local business bureau smart moves.
Harrah's has been great with comped rooms. Christmas visit - 3 nights at Ballys, this July -6 nights for $45. MGM 3 nights in March, 2010. I will hate it, personally, when I have to pay for rooms again. Question, what is the best place to stay downtown?
Golden Nugget is the only place downtown.
When you "never pay for a room" you are paying for it through gambling.
The California and Main Street Station are also excellent places to stay downtown. Owned by Boyd Gaming, both are extremely clean. The Golden Nugget is lovely also, but with my fat horrible looking body, I prefer the pool at the California, because the Golden Nugget pool is crowded with fit yuppies, and I stand out in contrast (at least my awful body makes other swimmers feel good about themselves).
Both Harrah's and MGM do a respectable job in mining their customer databases, and with the amount of data on customers now available (social marketing, demos', psyco, gaming behavior, stay behavior) the pressure to market the right offers to the right people is huge. While both of these companies have huge data analysis and target marketing capabilities, smaller properties are catching up due to their access to the core technologies that collect customer behavior data and the affordability of some of the data-mining services now available. Watch out Harrahs and MGM...
I realize that "you are paying for it through gambling", but I will gamble anyway. Would rather not pay for a room, than pay for one + resort fees, + taxes, etc. etc.
I always thought Harrah's policy of allowing customers to build points at their local casino, and use them in Vegas, was a winner.
It's like building a good farm system in baseball. Vegas is like the big leagues. Every gambler wants to be part of it.
Why would anyone wants to stay at Harrah's when they could stay at the MGM for free???. The only drawback for complimentary rooms is having to ditch out $100 for every room for every day you stay there. I would rather spend those $300 on the slots then having to part with them for a free stay. Thanks. AL.
Comment removed by moderator. Comment was all caps.
This isn't meant to read like a commercial, I'm just going to state the facts.
I've been getting room comps from Harrah's for years. Prior to Harrah's Total Rewards program it was the "negotiation" process with some host and I hated that "bs". If I wasn't getting room and many food/beverage comps from Harrah's I wouldn't be visiting Vegas three times each year, in fact I might not be visiting at all.
So long as Harrah's is keeping the TR program I'll be a regular customer staying and playing at the Harrah's brand hotel/resorts. I could give a hoot about any other Vegas casino/hotel.
It's just matter of who takes care of the customer best, By rstanley. That's competition and the faster the Strip is broken from control of the 2 gaming giants , the better off the customer.
3 or 4 emails a day is not outrageous, in fact, it's refreshing compared to the 6-8 emails a day last summer from MGM/Mirage.... add to that the text messages and i'm inundated with offers... all basically the same across the resorts they have, just different price points...
don't doubt how desperate they are to use their database the 'right' way (make more money way)
Thank you JohnPinNV. I guess some people just have nothing to say so they just disagree. By the way, I didn't say that to bash Harrahs. They just got a little agressive for me. We still go to their properties.
Just returned from another fabulous time in Vegas. I agree that there is a Monopoly out there, but were still treated like we were someone. Belagio was a ghost town during the day, NO ONE playing! At night it picked up. City Center was amazing, and I hope for Vegas sake, it stays that way! The Flamingo was great, 3rd year in a row and didn't pay for a thing. I like both comp programs. We spent a little time in the trashy joints, Bills, Casino Royale & had a good time there also. Even downtown was packed. Have to say, it seems like Vegas is picking up from where it was last year. Maybe some of the hard times are over. It would be nice though if MGM and Harrah's would give up some of their properties so we could enjoy the fruits of competition!!!
Vegas has to wise up. Give more promos.