COLUMN ONE : Las Vegas Gambles on Families : Campaign to lure parents and children brings big crowds--and backlash. Holdout casinos decry the image change. Even backers concede that poor planning has caused some gaffes.
Darrell Luery still remembers the day he came face to face with this city’s new image as a family resort. It was at the vast new MGM Grand Hotel, where he almost tripped over a woman changing her infant’s dirty diaper on the casino floor.
“It was one of those yucky ones, and I had to see the whole thing!” he says.
What makes the incident particularly piquant is that Luery is president and chief operating officer of Bally’s Las Vegas, a neighboring casino trying desperately to hold the line against this year’s influx of Vegas vacationers with children.
But Bally’s may be trying to turn back the tide.
Las Vegas this year is likely to see a record 29 million visitors. By most accounts an unprecedentedly high percentage will be children, hauled off for vacations in what used to be known as America’s Sin City by parents dazzled by a burst of nationwide hype positioning Las Vegas as the country’s newest family resort.
The impact was visible all summer long, as the fabled Las Vegas Strip was awash in children. They thronged the walkway in front of the new Treasure Island resort three times a night to watch an elaborate live pirate battle; ogled dolphins and white tigers at the neighboring Mirage, and dropped thousands of dollars worth of quarters into state-of-the-art video games at the new Luxor and MGM Grand casino-hotels.
But the one thing they were not permitted to do was gamble, and therein lies a key reason that the family resort idea is generating perhaps the most important debate about Las Vegas’ future since Bugsy Siegel built the original Flamingo hotel-casino in 1946.
“To me it seems funny that we’re going after a market for whom the biggest activity in town is illegal,” says John A. Schibrowsky, an assistant professor of marketing at the University of Nevada at Las Vegas, who has studied the economics of the phenomenon.
Phenomenal it is: Hotel occupancy rates in town have been running higher than 98%, despite the addition of about 10,000 rooms in nine months.
“When you look at the numbers of people traveling to a casino destination in America, they’re popping,” says Glenn W. Schaeffer, the former president of Circus Circus Enterprises who is a partner in Gold Strike Casinos, which is planning a new family-friendly resort for the Las Vegas Strip.
For now, at least, the city’s resort planners seem to have found a formula to appeal to many visitors too young to gamble.
“It’s awesome,” said Randy Dickenson, 13, of Chicago after an hour’s play at the Luxor Hotel’s vast, two-story video arcade. (He estimated he had spent about $15 pumping quarters into Mortal Kombat II and virtual reality combat games.)
But Schibrowsky and others argue that Vegas is so dazzled by the near-term success of its family promotion that it has not focused on the problems a radical change in tourist demographics would bring to the city.
For one thing, the traditional practice of using rooms, restaurants and even air fares as loss leaders to get customers to the playing floor will have to be reconsidered if the number of rooms occupied by non-gamblers continues to rise. That in turn will cut into Las Vegas’ price advantage over such more-established family resorts as Orlando, Fla.
“This town was built on cheap rooms and cheap meals to get people to gamble,” says Dean Harrold, a senior vice president of Bally’s. “Are (family customers) playing as much in the casinos? No, they’re not. And if you can’t make the money in the casino, you’re going to have to make it up in the room rate.”
The family market also means not only parents changing diapers in the casino but an apparent increase in gambling violations by minors.
Last month the State Gaming Board issued the first citation to a Strip casino--ironically Bally’s, which discourages family business--for allowing a minor to gamble. (The 19-year-old lost more than $6,200 in three hours of blackjack.)
Bally’s has agreed to pay a fine of $20,000 to $25,000 and to toughen its enforcement of underage gambling rules, according to officials of the casino and the State Gaming Commission.
The case is widely seen here as a warning that gaming authorities believe the casinos are too lax about monitoring the behavior of people under 21, the state’s legal age for gambling. Ron Asher, the Gaming Control Board’s enforcement chief, says his agency regards underage gambling as “an industrywide problem” and that several more cases are being prepared against other casinos.
“When I was growing up in Las Vegas we understood that you could not even walk through the casino to get to the restaurant,” says Nevada Gaming Commissioner Steve DuCharme. “The hotels had to provide another route. Now everyone who comes in has to walk through the casino, because they put a sea battle out front and a 35,000-square-foot video arcade in the back.”
Keeping children and gambling devices apart is not made easier by one of the axioms of modern casino design--that slot machines should be located along the routes of heaviest foot traffic. Because those are generally the paths between, say, the video arcade and the room elevators, underage visitors inevitably confront temptation.
“Word of mouth and common sense tell you that if you put them in harm’s way, some kids are going to reach in their pockets and plunk down their paper-route money,” DuCharme says.
Indeed, a recent informal sortie around the casino floor at the MGM Grand turned up several children casually dropping coins in nickel or quarter slots and many more standing by as their parents played, which is illegal.
MGM executives say all their floor staff are trained to warn off underage gamblers. However, gaming authorities say that in periods of heavy family travel the flow of minors through casinos may be too great to police adequately. Like liquor store clerks, casino dealers and bosses may have to get into the habit of “carding” anyone who looks underage, Asher says.
Under Nevada law, a minor who gambles or loiters around a table game or slot machine and the casino where it occurs both can be charged with misdemeanors; violations carry fines of up to $1,000. The casino is also subject to administrative penalties, including fines of up to $250,000 or loss of its license--regardless of whether casino personnel knew the gambler was underage.
Accordingly, accommodating families may mean redesigning casinos to keep children off the floor, upgrading swimming pools and other amenities to give them more to do, and acquiring more expertise in non-gaming entertainment attractions--an area in which such major casino companies as MGM Grand and Circus Circus Enterprises lately have committed embarrassing fumbles.
“I’d say they need more facilities for the kids, other than letting them spend $200 an hour on the video games,” said one frequent Las Vegas visitor, Frank Russo, a Coral Springs, Fla., businessman who was making his first visit with his daughter, Dina, 13, in tow.
Dina, weary of looking at man-made sights and being asked by security people to move along, agreed that Las Vegas needs more organized teen-agers activities. “There’s a lot more for us to do on a cruise,” she sighed.
Some casino executives fear, meanwhile, that repositioning this town as a family resort could alienate its traditional clientele of serious gamblers without significantly expanding the total market. Executives at the Las Vegas Hilton, the city’s premier convention hotel and a mecca for high rollers, say they already are getting more business from customers who resent having to gamble elsewhere with a lot of kids around.
Other casinos already have embarked on counter-marketing against the family hype.
“We want people to think of us as the last bit of real distinction and class left in a place turning more mid-market and family-oriented,” says Henry Gluck, chairman and chief executive officer of Caesar’s World, the owner of Caesar’s Palace, one of the top hotels for serious gamblers on the Strip. The hotel has upgraded several of its most luxurious high-roller suites and is planning to double the size of its upscale Forum Shops mall, which has three street entrances but only one exit--into the casino.
Still, some say that rising competition for gamblers’ money across the country leaves Las Vegas no choice but to position itself as more than a gambling venue. Although casino gambling once was permitted only in Nevada and Atlantic City, N.J., 21 states have legalized full-range casinos and virtually all of the largest metropolitan areas are within 200 miles of slot-machine and table-game play.
Over the last year or two, that competition has inspired Vegas hotel managers to try to broaden their appeal. “The overpowering statistic is that only 15% of vacationers in the country have ever visited Las Vegas,” says Clyde Turner, Circus Circus Enterprises chief executive.
If Las Vegas’ traditional marketing target was a 50-year-old whose children had departed the nest, leaving him with plenty of disposable income and time, now the focus has shifted.
“Our principal marketing target is the baby boomer in his 40s,” says Gold Strike’s Schaeffer. “He’ll frequently choose to travel with his family, so you have to offer a full-service entertainment product.”
The new marketing era took off with the launching late last year of three major Strip resorts costing more than $2 billion combined: The Luxor, an Egyptian-themed pyramid opened by Circus Circus; Steve Wynn’s pirate-themed Treasure Island, and the MGM Grand, with Wizard of Oz decor and a theme park designed to resemble a mini-Disneyland.
They joined two properties also regarded as family-market oriented, both owned by Circus Circus Enterprises: the original 1968-vintage Circus Circus and its 1990 spinoff, the Arthurian-themed Excalibur.
The three new mega-hotels were not all equally pitched to tourists with children--Mirage Resorts, owner of Treasure Island, likes to call its properties “family-neutral” rather than “family-oriented.” But the openings generated a world-class publicity blast, including a cover story in Time magazine just as many families were planning their summer vacations. The result: Near-capacity business all summer.
The hoopla inspired by the new resorts generated its own momentum. Already, ITT Sheraton has announced a 3,500-room, $750-million themed resort to go next to its Desert Inn hotel-casino and be called Desert Kingdom. Wynn, chairman of Mirage Resorts, plans to build a major themed resort on the Strip location once occupied by the Dunes, which he demolished to great fanfare earlier this year. All together, as many as 20,000 new rooms may open by 1997.
The latest surge, however, has created an “identity crisis,” in the words of Barry Shier, president and chief executive officer of the Golden Nugget, Mirage Resorts’ high-grade hotel-casino for serious gamblers in downtown Las Vegas.
“We are an adult Disneyland, but we are not Disneyland, and I do not believe it is anyone’s intent that we should become one,” Shier told the magazine Las Vegas Style this summer. “Now with school out for the first extended period since these new properties opened, people are saying things like the gaming contribution per customer is not as it used to be. Well, big surprise! If you’ve got children occupying certain rooms, they can’t gamble.”
In fact, the evidence shows that parents coming with children also gamble less than those who come alone. Joseph Oxman, a Seattle food broker who recently spent three days at Treasure Island with his wife, Darcy, and two children, said he had budgeted $200 a day to play blackjack. On his last visit in 1984--without the children--Oxman and his wife each had spent $400 a day. (This time, the kids each were spending about $30 daily on video games.)
“You come here and even if you want to gamble you can’t, because you have to watch the kids,” said Marvin Hicks of Monroe, Mich., a guest at the Tropicana whose family responsibilities were keeping him from the craps tables. Added his wife, Dawn: “You can’t even drop a coin in the slot machines, because with the kids you have to keep moving through the casino.”
Statistics bear out their experience. Visitors’ average gambling budgets in 1992, the last year for which such a breakdown is available, were highest in winter and fall when the percentage of tourists with children was lowest, and bottomed out at $39 per person per day in summer, when the percentage of parties with children peaked at 12%.
As it happens, economics and other factors have been driving down visitors’ gambling budgets generally--to $50 per person per day in 1992 from $105 in 1982. That’s a troublesome trend that will only continue if Vegas becomes more family-friendly, particularly when compounded by a growth in conventions, many of which bring non-gamblers to town.
(The percentage of non-gambling visitors rose to 10% in 1993 from 3% in 1987, according to the city’s Convention and Visitors Authority.)
For now, there is reason to wonder whether Las Vegas can create the kind of resort flavor that keeps families coming back year after year without getting bored--or offended. Girlie shows and other raw cabaret acts may largely have been shouldered off the glossy south end of the Strip (“The PG mentality is here,” says Gold Strike’s Schaeffer), but a large percentage of the taxis in town still bear roof placards advertising a downtown attraction called “Topless Girls of Glitter Gulch.”
Some experts doubt that even top-notch gaming executives can prosper in the trickier entertainment business, as they must to maintain a family trade.
“Blackjack and slot machines are well understood and quite predictable,” says Eugene Christiansen, a New York-based casino consultant. “But family entertainment takes a whole different set of skills.”
Nothing proves that as well as the travails of Vegas’ two most highly touted family attractions: the MGM Grand’s Grand Adventures Theme Park and Circus Circus’s Grand Slam Canyon, a venue of roller-coaster rides and themed amusements.
Both charged ambitious admissions prices when they opened last year--$25 a head for MGM’s park and $20 for Grand Slam Canyon. Both were flops.
Grand Slam Canyon was rife with design flaws, including a flume ride that drenched its customers (“Now it’s just a light spray,” says Turner). Attendance was so poor that the company shut down the attraction for three weeks last October for a total redesign. It reopened with an admission price of $3, with an additional fee charged for individual rides.
MGM, meanwhile, oversold its theme park’s quality without devoting to it sufficient imagination and expense. “It was announced as a $110-million park,” says a competing casino executive. “At Disneyland, Splash Mountain alone cost $80 million.”
Among the MGM park’s shortcomings is that it is open to the skies in a town where the daytime temperature during the summer vacation months can top 110 degrees. The park closes at 7 p.m., just about the time the desert heat begins to wane.
Already, MGM Grand has cut the admission price twice, most recently to zero (customers wanting to enjoy its seven rides buy a separate admission at $15 for adults, $11 for children). That change almost instantly doubled revenues at the retail shops and restaurants in the park. Still, on a recent midday visit, the park was virtually deserted while the state-of-the-art video arcade inside the air-conditioned hotel was jammed.
For all that, most observers believe the family trend in Las Vegas is just beginning, powered by a generation of executives no longer convinced that the casino needs to be the only profit center in the hotel. The Mirage and Treasure Island are turning profits by selling trademark T-shirts in their retail shops, and room and food prices at the MGM Grand suggest they no longer are pure loss leaders.
“Visitors’ gambling budgets may be lower, but their overall vacation budgets are not,” says Schaeffer. “At the end of the day, it doesn’t matter what part of the store they spend it in.”
New Look for Sin City
Tourism in Las Vegas is reaching record heights as a segment of the city’s hotel industry sets out to draw families to what long has been an adult-oriented destination. But the new visitor mix is hammering away at gambling levels, which already had been falling for a decade as conventioneers and low-rollers displaced Las Vegas’ traditional customers.
Tourism is up...
Visitors to Las Vegas (including repeat visitors)
...as is betting in Clark County’s casinos...
Gross casino revenues*
(in billions of dollars)
...but the average visitor’s daily gambling budget has plunged...
(Based on surveys of visitors)
...and gambling levels are weakest when there are more children in town.
(Data is for 1991-92)
Percent of Visitors with Children: 5%
Daily gambling budget, per person: $62
Percent of Visitors with Children: 6%
Daily gambling budget, per person: $47
Percent of Visitors with Children: 12%
Daily gambling budget, per person: $39
Percent of Visitors with Children: 5%
Daily gambling budget, per person: $53
* Includes gambling by tourists and residents
Sources: Las Vegas Convention and Visitors Authority; University of Nevada, Las Vegas