Estimating Untracked Gaming Volumes by Hotel Occupancy Segment

Many Las Vegas gaming properties also operate hotels with thousands of rooms, which cannot be filled with premium gamblers every night. Given the fierce competition for premium gamblers, hotel-casino executives must pursue other segments as well. To choose segments that optimize earnings, management must compute the total value of a room night for each target segment. Customer spending traverses several departments, including slots, table games, restaurants, and retail. Unfortunately, many of these transactions are not captured at the customer level. Therefore, equations must be derived to estimate critical values, such as the change in unrated slot play resulting from a one-unit increase in the wholesale room segment. Such equations allow executives to fill in crucial gaps in the segment valuation grid. Once the overall profit per room night is computed for each hotel segment, operators can rank segment values. This business intelligence identifies the most and least valuable segments, allowing management to move toward optimizing earnings. Performance data from a Las Vegas Strip hotel-casino are used to illustrate the tenability of models designed to predict critical pieces of this profit puzzle. Unique and important differences in the margins of hotel-casino profit centers are also highlighted.