Casino industry is considered to be one of the most profitable industries in the world. Its impact on the national economies is crucial. Theoretical studies within this sphere show us that the casino gambling entities provide their governments with quite significant benefits such as high level of taxes paid, infrastructure development by the cost of casinos and increased level of tourists to places where such enterprises are located. But in most publications little attention is paid to the problem of defining the specific impact of casino gambling as a part of hotel enterprises. That is why our main goal is to conduct thorough analytical research in order to understand the impact of casino gambling on hotel businesses. To be fully practice-oriented our study should concentrate on particular casino area. To this end Las-Vegas – the heart of global casino industry- suits the best. The objectives to be achieved by the research are as following:
Identify the impact of casino gambling on hotel businesses in Las Vegas
Define how casino establishments may increase overall hotel productivity
Study the main factors of increasing total revenue by the hotel
Provide the target audience with practical recommendations formulating the ways of increasing productivity of hotel business by gambling offering
The answers to the several questions should be found:
How the casino gambling influences overall hotel performance?
Who actually gains and losses?
What are the practical ways to increase casino productivity?
What is the role of casinos within the hotel organizations?
According to T. Shy gambling is one of the most powerful economic development tools. It can foster economic growth better than other mechanisms had ever attempted to. Nonetheless there are some doubts that the casino brings only benefits to the economy. Some people think that casinos decrease the level of the creditability of population in general. They also suppose that most casinos relate to the shadow or underground economy because of the fact that full cost accounting is rather difficult task. As we can notice from all the facts mentioned above casino establishment outcomes influences economic sectors in different way, so it is important to identify impact of casino gambling on particular industrial components such as really hotels.
There are two types of such entities. The first one is the casino hotel. That can be described as establishments which include casino and temporary lodgings that are quite similar to hotels. In this case role of casino is establishing new hotels within the industry that naturally results in its growth. At the same time the occurrence of new hotels leads to increase of competition and can push some players of hotel business out of the market.
Another type of entity which consideration suits better for our report is common hotel structure that offers gambling service to their clients. In this case we can notice that casino turnover significantly influence the amount of money received by the hotel.
The results of the casino implementation as the part of hotel business are as following:
Increased number of visitors who are interested in gambling
Additional source of money-making
Significant growth of the total revenue
Promotion of hotel brand by the way of casino advertizing
Diversification of the hotel activity
In general, the casino implementation at the hotel has really positive influence on the hotel general performance. To support presented point of view we need to look through some outcomes of the gambling service implementation within well known hotels of Las-Vegas, such as Downtown Las Vegas' newest hotel and MGM Grand which is generally referred to as «gambler's Mecca». For both of these hotels the process of casino lodging inclusion to the general organizational structure of the hotel had positive consequences. But these two stories are rather special, let us give a brief overview here.
Now the downtown Las Vegas’ hotel is known for one of the most striking casino in town. The casino replaced successfully its previous instruments of visitors attraction. After 2 months after new service implementation the total profits grew twice its size. This hotel offers 25000 square feet of gaming space with 600 new slot machines to its clients. The casino implementation also leaded to modification of hotel interior. According to Michael King, the designer of casino interior project, guests are to feel like they are gambling inside stylish factory. This approach to developing casino area in order to satisfy needs of clients also influenced other hotel facilities. Of course it had always been luxurious place, but after casino was established the quality of services dramatically increased. The hotel started to hold gambling tournament on different levels, which lasted more than one day only. That is why participants were to stay at the hotel and book expensive rooms. The players for the most of tournaments were to pay take-part fees. They were very effective additional source of money-making for the hotel.
Another well-known hotel with its own casino is MGM Grand which boasts more than 170,000 square feet of gaming space. It is like paradise for gaming enthusiasts. Contrary to the previously described hotel, this one had casino facilities from the very beginning. It was an answer to the increasing demand for hotels of such type and due to enhanced casino facilities this hotel was ranked first at the market.
It is also important to mention the Strip, where modern casino facilities along with comfortable accommodation, friendly dealers and swanky atmosphere made it really popular spot for gamblers all over the world. Luxurious cars, fashionable visitors are up-to-date reality of this hotel. But this is also very big difference to what the hotel was before casino establishment. It was oriented at the middle-class visitors who were not able to afford more expensive places to stay in. But modernization leaded to full system restructuring. And made this small place be one of the most attracted in the world for gamblers.
According to some reporters, establishing casino facilities in hotels especially in areas, where demand for such services is strong enough can provide hotels with some additional competitive advantages and also increase profits dramatically.
But there are always specific pros and cons which can be found. For instance, in some cases casino gambling facilities that are parts of different hotels require more complicated accountability by hotels and level of governmental control increases dramatically. Overall amount of taxes paid by hotels with casino are also higher.
Before deciding whether casino implementation in hotel is rational measure it is really important to make clear analysis of its pluses and minuses. But as far as we understood from our analysis, the casino is quite efficient instrument of increasing hotel productivity.
When conducting such analysis it is necessary to bear in mind such as important factor as competitive landscape. Consumer income growth and state spending increase demand for gambling. The success of casino implementation depends on efficient operations and effective marketing. Speaking about small gambling facilities they can thrive by catering to local residents. But this fact refers to smaller cities, where gambling industry is not so developed. In Las-Vegas most of the casino facilities are oriented on tourists.
The casino is also way of advertizing the services provided by the hotel. It attracts players who also try hotel facilities during tournaments and they become also new potential clients of hotels in future.
At the same time casino may cause traffic jams and traffic difficulty for other hotel clients who are not interesting in gambling. It may cause «opposite effect», when hotel gets different perspectives of casino implementation by the cost of lost clients who prefer more lodging-oriented atmosphere.
Some local residents are also annoyed by the casino functioning as a result of different factors. This fact may split the brand image of the company as social-oriented. It may also be a reason of different problems influenced by negative press reviews, jitters etc. But in general if the hotel has enough power (that is an essential, especially in Vegas) it may overcome such obstacles quite easily.
Conclusions
Now it is necessary to draw up conclusions reflecting achieved results. We identified the casino impact as positive enough to be a reason for establishing of the gambling facilities. Casino provides benefits for hotel industry, it increases profits, attracts new customers. Strong demand for the gambling tournaments results in increased demand for hotel services. The casino implementation by hotels is quite effective instrument of their business development. Some minuses of casinos also exist but due to many benefits they are rather not so significant. We considered several hotels in Las-Vegas with casinos as part of general structure and found out the result of such action. It was practical way of increasing overall hotel productivity.
Despite all the advantages of casino for hotels, it is important to look through the pros and cons before its implementation. Positive influence of casino gambling is also diversifying hotel activities in order to limit risks. Speaking about Las-Vegas casino industry is an essential part of hotel business in general. Lots of tourists visit Las Vegas for gambling and of course they need to stay in hotels. This also leads to increased competition among hotels and results in hotel industry development.
At the same time casino may split social-oriented image of the company, complicate the system of hotel accountability and increase taxes paid. But conducted research shows that there are more pluses than minuses. Casino gambling has positive impact on hotel business in Las-Vegas. It is fair to say that due to developed casino facilities hotel business in this city is profitable and successful. In our research we achieved set objectives and answered the main question
References
Association, A. G. (2002). State of the states: The AGA survey of casino entertainment. Retrieved February 3, 2015, from www.americangaming.org.
Authority, L. V. (2014). Las Vegas Executive Summary. Retrieved February 3, 2015, from www.visitlasvegas.com.
Plume, J. (n.d.). It’s all about the amenities. Casino Journal(15), pp. 32-33.
