Postcards from the Past, Lessons for the Future

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Postcards from the Past, Lessons for the Future
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1964 Democratic National Convention

• Should have been an economic boost to the
  fortunes of an aging resort already straining to
  compete.
• Instead, it marked the end of what had once been
  a grand era
• And it marked the beginning of a brutal downward
  spiral

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The Making of the President 1964

• The Original Bay of Pigs
• Theodore H. White

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The Indianapolis Star

• Early arrivals are dubious, inspecting rooms
  without TV or air conditioning and puzzling dark
  stains on the dingy wallpaper.

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Washington Star

• As a convention town, this is strictly
  Endsville. Now I know this is a resort left over
  from the early 1900s, but they could clean the
  rooms

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Cincinnati Enquirer

• paying for poverty at peak prices. Our room
  looked like something out of a Charles Addams
  cartoon book.

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Atlantic City in 1976

• Third highest percentage of public housing in the
  nation.
• About 40 percent of its housing was more than 60
  years old.
• Unemployment rate 20 percent, 40 percent in the
  winter.

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Atlantic City in 1976

• Population 42,000, down by more than a third
  from its peak.
• Senior citizens comprised 30 percent of the
  population.
• Entire tax base 317 million.
• Collecting less than 80 percent of its property
  taxes.

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Why did 1976 campaign work?

• Casinos were limited to Atlantic City.
• Tax benefits were designated to help seniors and
  disabled residents.
• Effective, well-organized campaign.

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Gamings promise

• 26 casinos by 1990
• Total revenues 1 billion
• 21,000 jobs
• 30.3 million in tax revenue by 1985
• Total annual payroll of 287.7 million
• 844 million in new construction by 1985

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Reality

• 12 casinos
• Total gaming revenue 5 billion
• Total employment 50,000 jobs
• Total payroll 1.2 billion
• Total construction 8 billion by casino industry
  alone
• Atlantic City is in midst of dramatic non-gaming
  expansion.

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What went right?

• Casino gaming fits perfectly into Atlantic Citys
  natural economic base.
• Atlantic City has become a regional center for
  gaming.
• Casinos are economic engine for entire region.

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Universal truths in gaming

• Doesnt evolve same way twice
• Requires significant community commitment.
• Works best with existing tourism infrastructure.
• Fosters unrealistic expectations.
• Regional issue.

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Unrealistic Expectations

• Gaming can miraculously solve all economic woes.
• Governments job is finished after legalization
  of casinos.
• Existing local population had an automatic edge.

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Reality of Gaming

• Gaming works best when it brings in visitors from
  other areas.
• Gaming works best when it leverages other
  attractions.
• Gaming works best when casino operators, public
  sector and other businesses work toward parallel
  interests

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Keep expectations realistic

• Anticipate and prepare
• Traffic will increase
• Both winners and losers will be created.

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Who will win?

• Those who have the necessary resources
• Skills
• Education
• Access to capital
• Those who plan, invest in their future
• Those who keep their expectations realistic

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What to expect

• One gaming property will not alter life as you
  know it.
• One gaming property well-managed and
  well-planned can function as an economic
  engine.
• One gaming property if planned to complement
  existing attractions can be a net gain for the
  community.

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Old reality of gaming

• Casinos were designed as fortresses, keeping
  their customers inside their four walls.

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New reality of gaming

• Gaming is a form of mainstream entertainment.
• It works best as one attraction among many.
• It requires affluent adults with two commodities
  time and discretionary income.

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How to be a winner

• Recognize that the number of visitors will
  increase.
• Many of those visitors will be seeking multiple
  experiences during their stay.
• This segment of the visitor base will be
  relatively more affluent.

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How to be a winner

• Visitors will be seeking value, not bargains.
• 7.99 buffets are not on their must-see list.
• They will seek
• Quality dining
• Quality accommodations
• Quality attractions
• This will require capital investment, including
  maintenance cap-ex.

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How to be a winner

• Develop joint marketing campaigns with
• Casino
• Loyalty program members get discounts.
• Negotiate deals in which loyalty points can be
  redeemed at your business.
• Negotiate terms for complimentary meals, rooms

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Example of potential agreement

• A quality area restaurant negotiates terms for
  accepting complimentaries from casino
• Comps are only accepted in what would otherwise
  be exceptionally slow periods.
• Casino pays pre-determined pct. of menu price.

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Advantages to Casino

• High-value customers get more options.
• Encourages more capital investment in region by
  encouraging more quality dining.
• Ratio of perceived value to cost is high.
• Customer gets a meal with a menu price of, say,
  50.
• Casinos actual cost 35-40.

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Advantages to participating restaurant

• Promote trial from new visitors.
• Gain incremental revenue during otherwise slow
  periods.
• Comped customers are more likely to order
  high-margin items, from alcoholic beverages to
  desserts and coffee.
• Get opportunity to participate fully in area
  renaissance.

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Other growth strategies

• Target increasingly affluent employees, other
  local customers.
• Target growing convention and meeting business.
• Sell goods, services to casino

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Gaming employment base back-of-the-envelope
analysis

• Casinos in PA will employ 900-1,200 FTEs
• A direct payroll between 25 and 35 million.
• An employment multiplier of 1.5

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Strategies to reach that employment base

• Recognize that they are also looking for quality
  attractions, new ways to spend discretionary
  income.
• Offer discounts.
• Extend hours, recognizing that the tourism
  industry is becoming more year-round,
  round-the-clock.

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Conventions, meetings business

• 61 percent of all conventions and meetings
  require 50,000 square feet or less.
• For meetings with attendance under 5,000, about
  59 percent stay in hotel rooms.
• Gaming could be an important consideration in
  attracting meetings business.

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Strategies to reach conventions, meetings
business

• Work with local CVB, visitors bureau
• That agency would gain more marketing resources,
  more assets to sell to meetings planners.
• Ensure that your properties meet the higher
  standards of conventions, meeting planners.
• Develop transportation system, such as shuttles,
  to move attendees from venue to venue.

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Strategies to sell goods, services

• Competition will be fierce.
• More distant businesses will bid on contracts.
• Use your location as an edge
• Reduce transportation, other costs
• Improve quality, reliability of service
• Price, quality will be decisive factors

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What are factors that will lead to success?

• Quality offerings
• Realistic marketing strategies
• Cooperation among local businesses, organizations

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• Having a great time in Pennsylvania.
• Wish you were here!
• Any questions?
• Mike Pollock

• Pennsylvania Association of Convention Visitors
  Bureaus
• Harrisburg, PA