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Standalone Casinos Present Opportunities for Hotels

Standalone Casinos Present Opportunities for Hotels

Glover explains that the Horseshoe Casino presented its partnership vision and desire to leverage excess capacity to all downtown hotels well before the casino opened, interviewing hotel operators to discuss the key elements of the mutually beneficial relationship. “Hotel proximity was important in our selection process, but a property’s ability to provide exceptional guest service was paramount.”

A reputation for good customer service and high-quality accommodations helped secure a partnership between the Chateau Avalon and the Hollywood Casino at Kansas Speedway in Kansas City. (It also helped that the boutique hotel was right across the street.) “Ultimately, it’s the guest experience that’s at issue,” says Steve Beaumont, the hotel owner. “The Chateau Avalon has the recognition as being a high-end boutique brand, so it made sense for both of us.”

The 100,000-square-foot Hollywood Casino opened in 2012 with slots, video poker, and table games, as well as fine dining and live entertainment. The partnership with the Chateau Avalon, which has 61 guestrooms and 23 suites, began a year later in April, providing the casino with lodging and services for its gaming customers. Beaumont says that the expectations the casino has of its hotel partners are extremely high. “They consider you an extension of their casino floor, and you need to reflect positively on, in our case, the Hollywood Casino.” Regular meetings enable the Chateau staff to better meet the casino’s needs and match its brand stands. “It’s not like some of the other business relationships you might have,” he says. “These are sit-down meetings, and you are going over who the demographic is, how it’s changing, and what you’re delivering in terms of service. It’s an ongoing relationship. It’s face-to-face.”

Beaumont says the benefits of the partnership are already evident. “It’s diversifying our guests, which is a good thing for us.” He adds that he has seen little differences, as well—while the typical Chateau guests may take advantage of the hotel’s spa, for example, guests who come from the casino are more likely to make use of d’Nile, its wine bar. “It’s an opportunity to expose your brand to more people than the one’s you market it to,” he continues. “For me as a boutique brand, it’s an additional benefit because visibility like things on their website can extend our reach beyond what my little brand can do.”

Most casinos will promote their partnerships on their website, and many work with partnering hotels on packages and promotions. “We are in direct communication and collaborate closely with our hotel partners,” Glover says of his Horseshoe Cleveland partners. “On occasion, we collaborate on packages for amenities, or we offer food credits at hotel restaurants.”

In the works, Beaumont says, are co-branding opportunities between Chateau Avalon and the Hollywood Casino, including billboards and radio spots. “That’s where the real benefit will be—when we start marketing to mass groups,” he adds.

From a development perspective, hotels and casinos have different objectives and needs. “It’s complex because the dynamics of gaming changes the whole value that is placed on the hotel by a casino,” says Greg Hnedak, founder and CEO of Memphis-based DreamCatcher Hotels, which offers turnkey hotel development solutions. “If I build a Westin, we’re there to make money as a hotel. We get revenue from our rooms and food and beverage and meetings, etc. With the casino, they’re not in business to make money off the hotel; they’re in business to add players who could stay conveniently on their property.”

Hnedak speaks from experience. The newly formed DreamCatcher Hotels had as its first client the Coushatta Casino Resort in southwest Louisiana, with two more similar projects in the pipeline. Prior to DreamCatcher, he was a founding partner of Hnedak Bobo Group, where he spent 34 years working with brands like Holiday Inn and Gaylord Entertainment.

Hnedak sees great potential in developing hotels for the untapped Indian casino market—although he cautions that the opportunity comes with definite hurdles. With the current franchise model, he says, for example, casino operators have no need for things like the brand’s reservation system or loyalty program. “The casino has its own loyalty program, and if you have a second one, it could be confusing for the customer,” he says. “In addition, through its loyalty program, the hotel will promote its properties in other areas, and all of the sudden, they’re encouraging the casino’s customers to go to other areas.”

Hnedak also notes that casinos need to be able to put their best players up as needed. “They don’t need a boy scout jamboree filling the hotel,” he says. “The hotel is a tool to help generate better revenue in the casino. One way they accomplish this is comping a room. In light of the thousands of dollars [players] might spend in a casino, the cost of a hotel room is nothing.” But for a hotel operator, he adds, that’s lost revenue.

“What makes that market stronger is that studies have come out saying if you give existing casino customers overnight stays, statistics show that they will spend two to three times as much money in the casino,” Hnedak says. “That’s an instant way to increase revenue—by building a hotel and giving them a night’s stay.”

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