Guest Whitepaper: Total Revenue Management – Casino Hotels

The essentials of managing casino customer demand to optimize profit.

By Sue Murphy CRME, ComOps

Introduction

Casino hotels comprise only a tiny fraction of hundreds of thousands  of hotels across the world. Perhaps due to this limited scope, the  industry lacks universal performance metrics, and casino customers  might find frustratingly varied booking experiences across different brands. The ongoing legalization of gambling-related activities,  however, has fueled growth in the commercial and tribal casino  industry over the past few decades. With casinos now in almost every state in the US, knowledge about gambling operations, loyalty  programs, and marketing tactics is increasingly prevalent. Gaming operators have long expanded into other hospitality industries and,  recently, online. Resort casino properties often host a vast array of offerings, including gourmet restaurants, spas, golf courses, and of  course, hotels. About 30 percent of almost one thousand casinos  across the US have a hotel on site. In most cases, the hotel is viewed as an amenity to the casino and not the other way around.

How do ownership groups and leadership teams ensure they get the most out of each room and measure success accordingly? What does casino segmentation look like compared to customary market segments, and how can casino hoteliers ensure they provide the best experiences to their most valuable customers? This paper aims to address some of these questions, explicitly targeted at the revenue management of casino hotel properties.

Since its inception in the airline industry more than 50 years ago, revenue management has
been applied across various industries and sectors. Already widely implemented to optimize airplane seat and hotel guest room revenue, revenue management has expanded into other profit centers, including cruises, convention space, restaurants, spas, golf courses, entertainment venues, and car rentals. The discipline has also extended outside travel and leisure to short-term housing rentals, storage units, and even hospital beds, to name some.
Businesses of all leanings benefit from maximizing revenue and profit from perishable inventory. For many hotels and resorts, ancillary non-room spend can be well over 50 percent of total revenues. This is probably most true for casino hotels, where the vast majority of property income is generated on the gaming floor.

It should come as no surprise to learn that casino hotel management companies were especially keen to adopt and implement the practice of revenue management and apply it to their casino guests. Yet while the ability to yield gaming revenue from casino segments is among the more crucial components of maximizing hotel worth in a casino environment, it is perhaps the least well-understood. Successful revenue management in a casino hotel requires in-depth knowledge of the gaming customer and an ability to measure projected guest worth. Revenue optimization also requires that all hotel demand is yielded. This means casino guest reservations are booked based on customer worth without preset offers or ‘guaranteed’ rates. The combination of understanding guest worth and yielding all demand allows for optimal revenue and profit.

Casino customer valuation and segmentation

Segmentation

Segmentation is a critical component of any successfulSample Segmentation breaks - Casino Hotel
hotel revenue optimization strategy. In casino hotels, the worth breakout for gaming guests is essential, but it is also necessary to understand the non-casino business mix. Increasingly, casino hotel properties analyze their hotel business on two levels—one for traditional market segments and the other for specific casino segments. The main difference between the conventional market segments in casino vs. non is the need to include ‘casino’ as a source of business. For financial purposes, hotel leadership must ensure the casino source is further broken down into “cash” room nights and “free” or “comp” room nights, as demonstrated in the example provided.

Valuation
The casino segments, as defined above, work for financial reporting and budgeting but are
insufficient for yielding purposes; hotel leadership has to collaborate with marketing to build
out additional breakdowns based on projected customer worth. The guest’s worth segment
dictates whether they will receive a discounted cash rate, a comp offer, or a combination of
both.

Casino customer valuation requires a data warehouse with detailed revenue tracking at the
individual guest level. Fortunately, a player database is the foundation of most casino loyalty
and marketing programs. Casino customers are heavily incented to use a loyalty club or a
“players card” to reap rewards such as free slot play, complimentary dining, and room nights. For chains or multi-property entities, a universal database is a best practice, encouraging loyalty to the brand and enhancing the customer relationship. The loyalty database will include various levels or tiers ranging from brand new customers to the most loyal ‘VIP’ guest. A customer’s tier level is based on their cumulative worth, derived from slot and table play, but increasingly RM teams are incorporating non-gaming ancillary spend (cash spend for hotels, F&B, etc.), and casino management companies are starting to integrate sports betting and online gaming with the recent advent of both in several markets.

While cumulative worth or loyalty can be a factor Examples of casino segment worth breaks in the hotel valuation, from a hotel revenue standpoint, it is necessary to understand a customer’s projected worth for each night of their stay. The customer valuation is usually an in-depth formula incorporating trip and play history to devise an average nightly estimate of a guest’s potential future worth. This estimated worth (or profit) value, along with the forecasted demand, dictates the price quoted to that guest. More precisely, the value determines the customer’s segment and dictates pricing at the segment level. A hotel gaming enterprise can decide which segment breaks are best suited
to their business, just as they will want to customize the customer valuation for their needs. A smaller property, for example, may have fewer segments but more breaks at the higher worth end of the database. Certain hotels in high frequency markets may ignore non-hotel trips in the valuation as it would be less predictive of their play behavior during their stay. More info in: “The Revenue Director & Casino Customer Valuation” by Matt Flemming,
https://www.comops.com/our-insights.

Posted in Whitepaper

Google Analytics 4 – what is it and what do I need to know?

Since its release way back in 2005, Google Analytics has had a significant impact on the way we are able to monitor, measure and make changes to our website performance. Sure it’s been through many significant updates to improve its functionality and usability over the years, but this time, one of the most widely used analytics platforms on the web, is hitting us with a hefty update.

We all knew the change was coming but the announcement still made it all very real…

The release of Google Analytics 4 offers a range of new features including many that were previously available only to customers who paid for Analytics 360 – so watch out for a lot more functionality. 

The most noticeable changes, compared to older versions, is that GA4 places a heavy focus on overcoming regulatory changes such as GDPR, can work with or without cookies and makes tracking users across multiple platforms much easier to achieve. 

Here are some of the top-level benefits and improvements we expect to see rolled out with Google Analytics 4:

  • More robust cross-device and cross-platform tracking
  • Accurate reporting on unique users across platforms
  • Advanced analysis reports available to all, not just 360 users
  • Free BigQuery connection
  • New metrics for more accurate tracking on your website
  • Robust cross-platform insights
  • Debugging within the interface
  • No limits to data
  • Automatic event tracking

Let’s have a closer look at what’s coming our way this time next year…

One of the main changes is the User Interface on the platform which is completely different from Universal Analytics predominantly on the navigation tab on the left hand side.

GA4 report 1

Google Analytics 4 Interface

GA4 report 2

Universal Analytics Interface

 Another change is that GA4 is based on ‘events’ as opposed to the ‘sessions’ used by Universal Analytics. This change will force us to readdress how we think about attribution in the ‘cookieless future’. For example, visiting a page, watching a video or scrolling down a page.

It’s focused on giving a “more complete understanding of the customer journey across devices.” And it seems that it’s more focused on measuring an end-to-end shopper journey, and not just individual metrics across devices/pages/segments.

GA4 report 3

There is a focus more on users and audiences & not on sessions and pageviews. The new acquisition section comes with two sections: User acquisition and Traffic acquisition which gives more insights to how the user is interacting.

GA4 report 4

These are just a snapshot of the changes made by Google. We will continue to delve into the new functionality this platform offers over the coming months so stay tuned for updates.

So, what happens next?

Don’t panic – you have a little time before all of this really affects you and marketers can run Universal Analytics and Google Analytics 4 in parallel for now. 

GA4 is still some way off from becoming the default Google Analytics platform, but it’ll get there eventually. Now’s the perfect time to start learning more about GA4—and collecting the information you’ll need to make comparisons in the future.

At SHR Group, we are rolling out GA4 for our customers as we want to start collecting GA4 data as soon as possible. The reason why is that when Google eventually switches to GA4 only, we are ready for the change with at least 12 months of data for year on year analysis. 

So for now, stay calm and keep tracking, we are all in this together.

Posted in Blog

Digital Marketing Trends

By Eileen Lillis, Sarah Sweeney and Elle Walsh.

Here in SHR Group our Digital Marketing team are always on the lookout for and testing new and innovative tech and marketing platforms to see how they could; be adopted for our Hotel clients.

Below is a snapshot of what the team have been keeping an eye and deploying for clients recently and what is keeping is busy in the coming months ahead. These new trends demonstrate the ever-evolving nature of digital marketing and the need for hotel marketers to stay on top of the latest trends to succeed in a competitive landscape.

Performance Max and New Campaign types changing digital marketing

This year digital marketers will experiment with new campaign types to reach their target audience in more innovative and engaging ways. One campaign type of particular relevance for Hotel Marketers is Performance Max for Travel Goals or Travel Max. This goal-based, multi-channel campaign has been designed to drive more targeted intent traffic for Hotels. Powered by Google’s AI campaign type, Performance Max, Travel Max helps hotel’s easily expand reach and drive more conversions across the entire Google ecosystem.

This new campaign type creates ads in multiple formats that will automatically serve across Google channels and inventory, including Google Maps, Search, YouTube and Hotel Ads (coming later in 2023).

The difference being that Performance Max for Travel Goals is a goal-based, audience-oriented campaign, instead of the keyword or network-targeted approach of previous campaign types.

Advertisers who use Performance Max achieve on average over 18% more conversions at a similar cost per action. (Google Support Article, 2023)

The degradation of demographics in digital marketing

Demographics have always vital component of any marketing strategy as they allow businesses to target specific groups of people based on their age, gender, income, education, and other characteristics. However, with the rise of ad blockers, privacy regulations, and the increasing use of mobile devices, it has become increasingly difficult to accurately capture demographic data and early signs show that only a small portion of your traffic being recorded in Google Analytics 4 will have age, gender and interests‘ data.

In just 1 example we have looked at GA4 data going back as far as July 1st 2022 (the cut-off date for year over data capture) and “Unknown” accounts for over 90% of the users when looking at the age demographics.

As a result, hotels may resort to using inaccurate or incomplete data sets to target their advertising if they stay focused on these demographic sets. The impact of which will be wasted resources and ineffective campaigns.

To combat this issue, hotels must prioritize transparency and ethical data collection practices, using only verified data sources and allowing consumers to control their data privacy settings. Additionally, new technologies such as artificial intelligence and machine learning can help Hotels more accurately reach potential guests. Overall, the degradation of demographics in digital marketing highlights the need for responsible data usage and ethical marketing practices.

The Impact of Measurement Changing with GA4

Google Analytics 4 (GA4) is the latest version of the popular web analytics tool from Google, and it comes with significant changes that impact how we measure website performance. One of the most significant changes is the shift from session-based measurement to event-based measurement. This means that instead of tracking pageviews and sessions, GA4 tracks individual user interactions, such as clicks, video views, and form submissions. This change in measurement allows for a more comprehensive understanding of user behavior, allowing hotel marketers to tailor their digital experiences to their audiences better.

Additionally, GA4 also includes more advanced machine learning capabilities, allowing for predictive insights and analysis, making it a more robust tool for data-driven decision-making. Overall, the impact of measurement changing with Google Analytics 4 is that it provides hotel’s with a more accurate and detailed understanding of their online audiences and empowers them to create more effective digital experiences.

Impact of Social Media platforms in digital marketing and how that is impacting revenue attribution

As businesses increasingly invest in social media ads, it has become challenging to accurately attribute revenue to specific marketing efforts. Paid social media ads can influence customer behavior across multiple touchpoints in the customer journey, making it difficult to identify the most influential touchpoints.

Furthermore, many businesses use multi-channel marketing strategies that involve multiple digital channels, which further complicates revenue attribution. To address these challenges, businesses are adopting more advanced attribution models that take into account the impact of paid social media advertising on the entire customer journey. For example, someone might search the brand name and click through a Google search ad, find the room but leave the site to go talk to their partner about the trip before making the booking.

After speaking with their partner, they search the brand name again but this time they come through to the site from a metasearch listing. Before they searched on Google, they may have also seen an ad on Facebook for the brand which inspired them to search for the property in the first place. In a situation like this, Facebook Google Search and Metasearch would all claim to have generated some of that revenue, so this is where the increasing use of social advertising impacts the revenue distribution.

As more and social platforms win market share, they will inevitably become part of the marketing mix for Hotels and they will start claiming revenue wins as their own through their own attribution models. In some cases, we are already seeing Paid attribution across multiple channels is summing to above what was delivered in the period measured.

Increasing Cost per Clicks – OTAs back in the auction

Competition for ad space on search engines and social media platforms increases the demand and therefore the price of clicks on paid search. Additionally, changes to search engine algorithms and advertising policies have made it more difficult for advertisers to achieve prominent ad placements without increasing their CPC.

In recent years, the cost-per-click (CPC) for hotel pay-per-click (PPC) campaigns has been on the rise. There are several factors contributing to this trend. Firstly, the competition among hotels and online travel agents (OTAs) such as Booking.com and Expedia has risen, in 2022 this was seen across all our clients who are still using OTAs, with the end of the pandemic the OTAs began spending on marketing campaigns again and the hidden cost of the OTAs was realized with typically a 50% in increase in the avg. CPC for the brand campaigns alone.

Finally, the growing popularity of mobile devices has led to an increase in mobile advertising, which typically has a higher CPC than desktop advertising. All of these factors combined have made it more challenging for independent hotels going it alone to achieve a profitable ROI in this increasingly crowded and expensive advertising landscape.

In SHR group we have over 20s year experience working across the digital marketing landscape and typically see ROIs of over 20 to 1 across all channels, we work with.

Learn how Cheval Collection increased Revenue by 82% through using SHR Group’s digital expertise.

Posted in Blog