G2E Conference Summary: Key Takeaways
At this year’s Global Gaming Exhibition and Conference, TMG staff attended over twenty conference sessions, covering issues such as gaming on the Internet, U.S. and Asian gaming expansions, operations models for revenue maximization, player tracking and marketing programs, and the state of financing for gaming projects. This blog post includes a few key takeaways from such discussions.
Capital Investment in Gaming
Throughout the conference sessions and our discussions with gaming executives, it became apparent that capital is currently available for existing gaming operators. However, during this recovery period, debt leverage needs to be lower for commercial lenders to be comfortable. Across the board, the scale of capital investments is expected to remain lower than in pre-recession times.
Simplifying the myriad of communications and streamlining the social media experience for conference attendees was the G2E Mobile“App”. Developed with Konami, the mobile device application put the entire conference in your hand. Conference organizers were able to send direct messages to attendees, as well as to live-stream all conference mentions in the Twitter universe. The integration of the conference with social media such as Twitter was reflective of the gaming industry as a whole, as smartphones now allow casinos a way to send real time offers to their patrons. In his Conference Keynote, James Murren, CEO of MGM Resorts International urged the gaming industry to monetize social media now.
New Forecasting Models to Improve Operations
One of the more interesting sessions at this year’s G2E was led by Chris Anderson of the Cornell School of Hotel Administration. He and the other panelists pointed out that revenue management begins with a simple demand model that only focuses on inventory (RNA) and demand for the day, but does not consider length of stay. However, length of stay is a very important variable in a casino revenue management model because the implications of a guest staying at a casino hotel are not one-dimensional. More complicated revenue management models consider length of stay, constrained and unconstrained demand, and market mortality (guests not captured). The revenue management model best suited for casinos is one that allows for maximum gross operating profit on a per room available basis. Achieving this type of modeling is possible, yet it requires investment in IT and databasing, and can only be achieved in incremental steps from more simple revenue management models.
Gaming on the Internet
Existing land-based casino operators see iGaming as an opportunity to create a new experience that immerses patrons into an experience that could not be had before. Further, it initiates people who are unfamiliar with casino gaming, potentially leading to new customers at bricks and mortar casinos. According to MGM Resorts International’s James Murren, the “next big thing” in the gaming industry will be the collision of casino gaming and video gaming experiences.
Gaming on the Internet is set to be commoditized, and governments will have to think competitively when setting tax rates. If operators are taxed too highly in one jurisdiction, they will have the ability to move to one with more favorable rates. In the end, the cost of taxes will be passed on to the customer.
For more, please see the previous G2E Conference Summary blog post: iGaming Congress.
Analyst, Economics & Gaming
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