Having the opportunity to tap into the knowledge and experience of a roomful of casino executives can help uncover insights that can impact your operation. This year’s GM and Casino Executive Exchange did not disappoint. In a panel led by Catalyst CEO Mark Astone featuring WinnaVegas Casino Resort GM Mike Michaud and Casino Del Sol CEO Kim Van Amberg, the discussion centered around key challenges in the industry and what operators are doing to mitigate them.
The challenges that were brought up by the group led to a discussion that revolved around five distinct areas:
- Inflation and Rising Prices
- Supply Chain Issues
- Staffing
- Marketing
- Cybersecurity and Insurance
In this blog, we are going to be expanding upon key takeaways regarding inflation and rising prices as well as supply chain issues.
Inflation & Rising Prices
The uncertainty caused by any economic instability can trickle into gaming and have a significant effect on visitation and revenue. When there are multiple causation factors like COVID and the war in Ukraine, it becomes tougher to trace the root cause. One of the more tangible issues raised was the price of gas. One GM commented that when gas prices went up in March, there was a noticeable drop off in trips. The erosion came from lower tiers first. Their solution which has been met with some success has been around lessening the gas price burden. In response, the following have occurred:
- Gas cards have a high perceived value. Using them for a promotion that was so popular they ran out of cards and had to get more.
- Tribal entities have the ability to undercut competing gas stations, potentially driving visits to the property.
- Some properties are offering tier discounts at the pump for their players, with top tiers getting as much as 20-cents off per gallon.
Inflation has hit operations and capital projects. From a food and beverage standpoint, some properties are passing costs to guests where they can while trying their best to keep food value constant. With the cost of construction materials rising, capital projects have been put on hold. Some properties are reserving capital for the future, hoping prices will come down and projects can be completed on a friendlier budget.
Employees have also felt the squeeze from inflation. Even the salary and minimum wage increases that have taken place over the last two years have been overshadowed by increasing costs. One property has found success in offering gas cards for perfect attendance to help offset the cost of employee commutes. Properties seem to agree that there is a need to focus on communications and show employees appreciation for their value to the property. It is important to ensure that mid-level managers have the tools and ability to support their team members appropriately.
Supply Chain Issues
Compounding the issue of rising prices is the availability of goods and materials. Availability of everything from rider items for entertainers to hotel soaps and shampoos to construction materials has been affected. The biggest issue is it hinders operators’ ability to plan. This is forcing operators to remain flexible with processes that can be affected by inventory shortages.
Operators are moving towards multiple sourcing for heavy-use items like hotel amenities. Traditionally there are items that are sourced locally or regionally for both political and economic reasons, but shifting to nationally sourced items may be required to keep up with inventory pars.
From a gifting perspective, items that used to be delivered from overseas within 90 to 100-days are now taking 10 months to arrive. It is important to push promotions and gifting plans accordingly to compensate for delivery times. Working with vendors that have stock on hand domestically can also reduce the risk of missing a delivery deadline.
Capital projects aren’t only affected by rising costs, but also by difficulty in getting construction materials in a timely manner. One GM suggested that waiting on all materials being on hand before beginning a project can help keep them on track and reduce disruption caused by lengthy renovations.
The biggest takeaway from the group was to really focus on being cautious and more conservative with capital investment and project planning in the short term and revisit as the cost of goods comes down and supply chain issues are less impactful.
Inflation and supply-chain issues have an undeniable effect on how we navigate the business of casinos, but they’re not the only factors at play. Stay tuned for the next post where we tell the rest of the story regarding the essentials of staffing, marketing, and cybersecurity. Knowledge straight from our industry experts; this is one you won’t want to miss.
