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Press Releases & Articles
Required Reading for All Casino Executives
by
Martin R. Baird
(Print,
PDF)
Native American Casino is an amazing magazine. The editors go to
great lengths to make sure they publish the best of what is new so
you, the reader, can be prepared for what is coming.
In my column this month, I join their ranks. I’m not hypothesizing
about what is happening in the world. I’m TELLING you there are some
scary facts available to those who pay attention. These facts can no
longer be ignored or discounted if you want your casino to have
long-term success.
Fact: The United States is in a recession. This is not a downturn or
bursting of a bubble. We’re flat out in a recession and that is
serious business! This is not my simple opinion. This statement
comes from Larry Kudlow. Kudlow was educated at the University of
Rochester and Princeton University. He started his career as an
economist for the Federal Reserve Bank of New York and has consulted
with presidents on the economy from Ronald Reagan to George W. Bush.
In April, Kudlow wrote an article for National Review magazine
titled “The Therapeutic Power of Recessions.” A subhead under the
title stated, “Economic excesses occur in free-market economies, and
from time to time they must be cleansed.” When I read that thing
about cleansing, it gave me a not-so-good feeling in my stomach.
Ludlow is not a politician or stock market jockey trying to get your
money. He is a highly regarded economist telling all who will listen
that they need to get ready to be cleaned out.
You may be thinking that I’m extreme and fixating on only bad news.
Perhaps, but I’m hearing too much information from too many people
to not take this recession seriously. You may also be thinking that
gaming is countercyclical. Basically, this means that when the
economy goes down, the casino business goes up. I believed that for
a long time, too, until I couldn’t find research to support it.
The casino world today is unlike anything it has ever been.
Competition is at a level that could never have been imagined. And
now a recession is competing for the dollars that guests have so
willingly spent at casinos in years past. This is not a good
combination.
Think of the Sacramento and bay area markets. In the past, people in
those areas only had Reno or Tahoe for gaming choices. Then some
innovative people opened Cache Creek Bingo nearby. Fast forward to
today and Cache Creek has an amazing casino, resort, spa, golf
course and restaurants that rival the best of the best. In the
interim, a casino opened on the other side of Sacramento, and this
year an additional property will be available.
In the old days, Americans went primarily to Atlantic City, Las
Vegas and Reno to gamble. Now gaming is considered entertainment,
and casino patrons have hundreds of brick-and-mortar properties to
choose from. And don’t forget online gaming. This model didn’t exist
in the past. The gaming world has changed, competition is in the
stratosphere and our economy is hurting. Each of you reading this
column needs to take action NOW to be prepared for the cleansing!
I did a quick Internet search for “California and recession” and
discovered that a group from UCLA still believes the state is not
and will not be in a recession this year. They do say a recession is
possible there if people stop spending freely. Hmmm. Home values
across California have taken a beating. The construction and finance
sectors have been rocked, and much of technology has been pummeled
in the financial markets. That could mean people will stop spending
freely, if they haven’t already. Perhaps UCLA should listen to one
of their locals. Christopher Thornberg, a principal at Beacon
Economics in California, says, “Jobs are falling. Taxable sales are
falling. This is a recession."
Now is the time to make decisions and take action. Some people will
hide and hope. This is often referred to as the ostrich principal.
Some will worry about what is happening. And there’s the group of
people I’m addressing in this article – you see the real issue and
take action to make life better for your tribe, guests and
employees. Will you be proactive and make the cleansing a positive
situation for your people?
This is not the time to cut and run. It’s hard to invest when cash
flow is down, but that is exactly what you need to do. Investing in
your product today will make your drop in business less serious and
your return to growth faster. Investing today could mean your
casino’s business is flat over the next 12 to 18 months and that
could be an important success to celebrate. This is not easy to read
when many of you are used to amazing growth rates and skyrocketing
profits that crush the previous year’s results.
I’ve mentioned California, but this is a national concern. I have
family in Michigan and that state is beyond a recession in my
opinion. Housing in Florida has been hit very hard, and people are
watching the equity in their homes vanish.
Please read this column again and call the team together to plan
your attack. Your plan must start with your guests and creating as
many guest advocates as possible so they come as often as they can
and look forward to their visits. Only advocates will do that. Your
plan also needs to touch your valued employees because many of them
are also affected by the economy. They may have family members who
have lost jobs. Their gasoline and food bills are climbing. All of
this makes it difficult to be motivated at work because just having
a job isn’t always a real motivator. So invest in your employees to
keep them focused and driven. They are the key to creating guest
advocates. In fact, turn your employees into advocates for your
property, too.
I know you will make it through the recession. Economic tumbles come
and go. I am challenging you to do what must be done now to make
your casino’s dip as small as possible. That will not only help you
today, it will set the stage for the future when your property makes
a rebound that is faster than the rest of the market.
Martin R. Baird is author of “Advocate Index™: An Operational
Tool” and chief executive officer of Robinson & Associates, Inc., a
customer service consulting firm for the gaming industry. Robinson &
Associates helps casinos determine their Advocate Index, a number
that indicates the extent to which properties have guests who are
willing to be advocates, and then implements its Advocate
Development System to help casinos create more guest advocates. The
Advocate Development System uses the proven methodology of Advocate
Index in combination with best business practices to chart a course
for growth and profitability. More information about the Advocate
Development System and Robinson and Associates is available at the
company’s Web sites at
www.advocatedevelopmentsystem.com and
www.casinocustomerservice.com. Robinson & Associates may be
reached by phone at 206-774-8856 or by e-mail at mbaird@casinocustomerservice.com.
Based in Boise, Idaho, Robinson & Associates is a member of the
Casino Management Association and an associate member of the
National Indian Gaming Association.
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