The Perfect Marriage Between Hotel And Casino– Marrying the data in Three Easy Steps

It’s a common refrain. You have a casino, you have a hotel, and you have a lot of questions. How much is a room worth, no really, how much is it worth? Is it better to focus on ADR and occupancy or maximizing rooms used for marketing? What would happen if we gave away more rooms? Just to name a few.

Answering all these questions, and more, comes down to one thing – data.  If you aren’t integrating data from your hotel system with data from your player tracking system you can’t possibly hope to accurately answer questions like these.  On the other hand, as soon as you tie the hotel and player activity data together it becomes straightforward, if not easy, to get a clear picture of the impact your hotel has on gaming, and visa versa.

Here are the three steps to success…

Step 1: Match Players

The first step is to match players in player tracking with players in the hotel management system. If you swipe or key in player cards at check-in, this is easy.  But if your hotel system lacks a place to store player IDs, you’re going to have to do some work. In this case, try matching on a combination of first name, last name and birthdate. You may not get a 100% match rate, but even 80% or 90% will allow you to generate meaningful analysis.

Step 2: Match Revenue

Each of your systems is filled with all types of data, but only a portion of it is needed in order to understand how hotel and gaming impact each other.  Don’t try to integrate all the data at once; it’s a recipe for failure.  Instead, focus on the data that really matters.  If the goal is measuring how various actions impact profit, the first thing you’ll need to understand is revenue.

On the surface, this seems easy, but it can be tricky if you aren’t capturing all of the necessary data. For starters, you need to know which room nights are the result of marketing offers. Assuming you have this data in your hotel management system you can easily create a report that shows the theoretical gaming revenue associated with each room night. This is the exact same revenue data you are already pulling into your campaign postforma. (You are doing a campaign postforma, right?)  And if you aren’t recording the marketing offer when your guests check in, you’ll need to amend that business process before you can complete this basic exercise.

When you’re ready to take things a step further you can also measure the theoretical gaming revenue associated with secondary guests. This hinges on recording the presence of additional in-room guests, and matching these players to your player tracking system using the same methodology you use for primary guests.  Once this is done you measure the additional revenue these players generate.  I can’t overstate the importance of getting this revenue information back into your campaign postforma reports so you can have a true picture of the total revenue your offers create.

You may also be tempted to measure the non-gaming revenue associated with each room night and feed this back into your campaign postforma. If the amount is significant this could be worthwhile. Just be aware that non-gaming revenue has costs associated with it, so if you consider this revenue in your campaign analysis you’ll want to include the associated costs as well.

Step 3: Match Costs

With the revenue correctly identified and integrated into reports, the last step is to tie in the relevant cost data so you can calculate profit and return on investment.

First, focus on finding the correct reinvestment costs associated with each marketing-driven hotel stay.  In most cases, these offer redemptions appear in the player tracking system, but they may have standard “issued value” amounts that were entered in the system at the time the offer was created.  In other cases, the redemptions may have no cost associated with them in the system at all. Either way, you will have to do some more work here to obtain the correct costs.

Here again, the process begins with identifying the room nights that resulted from marketing offer redemptions.  Then you can determine the number of room nights, the room types, the stay dates, etc. for each offer group for each campaign.  Before proceeding further, it’s important that your hotel and marketing departments come to agreement about the internal transfer cost that should be used for each room type based on weekday and season, and this information must be recorded in a spreadsheet or database.  With all of this information in hand, you are ready to calculate the room costs to enter into your campaign postforma based on actual room usage.

Now, you are also ready to calculate your theoretical profit for your marketing campaigns that offer hotel rooms. Simply subtract costs from revenue. You may also wish to calculate theoretical profit margin, which is theoretical profit divided by theoretical revenue. But probably the most valuable metric you can now calculate is the accurate return on investment.  You get the ROI by dividing theoretical profit by total cost and multiplying the result by one hundred.  To analyze marketing campaigns be sure to include all of your production and mailing costs in the denominator as well.

Once your data is organized it becomes easy to include the true impact room offers in your marketing analysis.  By running a few controlled tests, you can also determine the impact your marketing has on gaming with and without room offers on various days of the week, and throughout the year.  And now that you are measuring the true profitability it becomes easy to decide when to sell rooms versus give them away for the greater good.

(408) 663 - 1967Get Support