Harrah's broadens customer loyalty program

September 27, 2008 5:46:17 PM PDT
Harrah's Entertainment Inc. - long known for using detailed customer tracking to keep players coming through casino doors - is about to get a lot more data to tinker with.It's no longer just what game you play, how much you wager and how long you spend at the table or slot machine. The world's largest gambling company by revenue now wants answers to other questions about your stay: Where and what do you eat? What do you buy in the shops? Enjoy magic, concerts or just a good cocktail?

Those insights will help Harrah's get even more specific with its promotions, and possibly help the company make big decisions about how it designs and manages its hotel-casinos.

Harrah's data comes from its customer loyalty program, Total Rewards, which gives bonuses to gamblers in exchange for letting the company track betting habits through the use of membership cards, which transmit data to computers so it can analyzed. The company said it tracks about 80 percent of its gambling revenue through Total Rewards.

"(Harrah's) invested a significant amount of time and effort and money to develop the program and it's regarded as the best in the industry," said analyst Robert LaFleur of Susquehanna Financial Group. "They know more about their customers than probably any gaming company knows."

Now, the program has expanded to offer customers rewards without gambling, giving the company new data to mine about its patrons away from the black jack tables and slot machines. Harrah's will reward customers for spending on entertainment, restaurants and other services at the same leof its high-end gamblers revealed they were staying in other Las Vegas resorts even though they gambled at Harrah's properties. The deal made a revamped Caesar's Palace the company's centerpiece resort, and made Harrah's owners of Paris, Bally's and the Flamingo.

Company research had shown that most of its customers who visited Las Vegas without staying at a Harrah's-owned hotel were going to Caesar's Palace, Harrah's chief executive Gary Loveman said after the deal.

Harrah's took in $10.8 billion in total revenue in 2007. Of that, $8.8 billion came from gambling, while $2 billion - 18 percent - came from other sources, including hotel rooms, food, drinks and entertainment, according to a statement filed with the Securities and Exchange Commission.

Other major casino companies have historically done more to attract non-gambling customers, branding properties as luxury escapes, good meeting places for business and homes to top shows and celebrity chefs.

MGM Mirage Inc. took in 58 percent, or $4.5 billion of its $7.7 billion in revenues last year from sources other than gambling.

Wynn Resorts Ltd. brought in 27 percent of its $2.7 billion in revenue from non-gambling sources in 2007. And non-gambling sources made up $700 million, or 24 percent, of $3 billion in revenue last year for Las Vegas Sands Corp.

Norton said non-gambling revenue already has outpaced gambling revenue the past few months and is the area where the company sees the most potential for more revenue, even as casinos struggle to maintain visitors and grow in a rough U.S. economy.

Harrah's reported losses of $285.4 million for the first six months of 2008, compared with profits of $422.8 million in the first half of 2007.

Analyst Andrew Zarnett of Deutsche Bank said in an investors note that more revenue declines are expected as the economy puts even more pressure on consumers.

Norton said Harrah's is hoping to increase its share of non-gambling revenue by learning all it can about how people spend their money, whether they gamble or not.

"We know that there are at least several hundred thousand people in that category (who do not gamble), and then really the reality is we probably don't know because we have millions of people walk through our facilities that don't sign up for Total Rewards," Norton said.

David Schwartz, director for the Center for Gaming Research at the University of Nevada, Las Vegas, said a shift by Harrah's to track its non-gambling customers signals a play for new customers the company needs to attract, such as conventioneers.

"It's a bit of a departure but this is really where the industry is heading," Schwartz said.