Inside Asian Gaming

INSIDE ASIAN GAMING NOVEMBER 2018 30 COLUMNISTS reasons for a visit. The Pala Casino Spa & Resort in North San Diego County, California, introduced a wine cave in recent years. This is a fitting additional non-gaming amenity as the greater area seeks to position itself as a “wine country” destination similar to that in Northern California. From an entertainment perspective, attracting and securing a diverse set of entertainers (and at the right cost) can be a major differentiating factor for regional gaming properties, even if they’re competing with urban centers. After all, there are few city-center destinations that can offer dinner from a high-quality restaurant, a show from a well-known entertainer, a potential night- cap on the gaming floor and a hotel to spend the night in, all under one roof. Not only can regional casino resorts offer a diverse set of amenities to patrons, they can also offer them to potential entertainers. “SUPER AMENITIES” COME IN ALL SHAPES AND SIZES Don’t be fooled by the term “Super amenity”. Super amenitiesdon’t have tobesuper insize, although they often are. Unsurprisingly, the largest of the super amenities can be found in Las Vegas. Besides the aforementioned wine country in Southern California, the new Ocean Resort Casino in Atlantic City seeks to capitalize on the growing popularity of Topgolf without the space required of a full- scale Topgolf range. The resort will offer the world’s largest Topgolf Swing Suite, which will include 11 golf-simulator bays. At less than 30,000 square feet, the amenity is still large but significantly smaller in scale than a full-fledged Topgolf range. Elsewhere, there has been a trend of introducing “food hall” food and beverage concepts at regional gaming properties. From an operator’s perspective, these offer an attractive speed of service, allowing gamers to return to the casino floor quickly, and a similar footprint to quick service food courts. From a patron’s perspective, these concepts offer a diverse set of higher quality food offerings – from wood fired pizza to specialty ethnic cuisine to specialty cocktails. ARE “SUPER AMENITIES” SUPER INVESTMENTS? Super amenities may draw press coverage and attract a new type of customer to gaming properties, but are they financially viable? Perhaps more importantly, does it matter if they represent financially attractive investments on paper? It is true that these so-called super amenities may not be for every property. Some research suggests that building a parking garage shows the highest return on investment for gaming properties, so our recommendation has always been to build the amenities with the greatest return on investment first. Then, the focus can be switched to other things that may be desired but are less profitable. While a successfully operated hotel project at a casino resort, for example, will generally have a payback period of three to five years, it may take developers of more atypical super amenities longer to recoup their investments. However, anecdotal evidence suggests that some resort elements in this new class of amenities, such as movie theaters and tech-infused golf ranges (with capital costs ranging from roughly US$5 million to US$50 million), provide very strong financial returns. Given the small sample sizes, it remains to be seen whether the success will translate from market-to-market and it is a rigorous financial debate. In the end, it may not be possible to completely quantify the ROI on something that creates an iconic definition for an IR that is used in multitudes of ways to embody its brand. The Bellagio celebrated its 20th anniversary in October. The fountains at the world-renowned property have been running for many years, but the sidewalk is still packed with onlookers when the fountain show starts. The emphasis on non-gaming amenities at Bellagio hasn’t dampened the property’s profitability at all. In the first six months of 2018, according to MGM Resorts International’s earnings reports, Bellagio had the third-best occupancy rate in Las Vegas at 94.5%, but the highest average daily room rate at US$283 and the highest revenue per available room at US$268. Globally, Bellagio had the highest six-month operating income among MGM properties at US$222.2 million and the second-highest cash flow, US$267 million, behind MGM China in Macau. Luxor last year launched its specially designed eSports Arena Las Vegas.