Forgive Harrah's Entertainment if it brags a little. After all, the company has posted 14 straight quarters of "same-store" growth and its marketing program has been hailed as a model for the industry.
Brandishing a 26 million customer database that, in the words of CEO Gary Loveman, "rivals AOL,'' Harrah's has built player loyalty from coast to coast. And determining that demand "vastly exceeds" supply, the company is aggressively pursuing new opportunities.
The Rewards card, for example, is now tying into off-property outlets such as Macy's and Sak's Fifth Avenue for cross-promotion. The three-level card program has also been tweaked to offer more deals and incentives to what Loveman calls "low-value" customers.
"On the casino floor, we can locate a 60-year-old Diamond card holder from Indiana,'' the MIT-trained Loveman told analysts at Global Gaming Expo. Even better, 40 percent of card holders are using them in multiple Harrah's venues.
Targeted promotions and aggressive pricing have boost room revenue from an average of $172 to $196 in the last two years, execs say.
Analysts are generally impressed. "Compared with Park Place and MGM Mirage, Harrah's has better credit ratios and is more diversified,'' said John Kempf of Goldman Sachs. "They're like 7-Eleven or McDonald's-they're everywhere and they're the same wherever you go,'' added one competitor.
Expansion will continue in lucrative new markets, says Harrah's exec Chuck Atwood. "It's harder to make the same returns here [in Las Vegas],'' he explained. "We want to be everywhere we can.'' The company operates 26 casinos in 17 markets nationwide.
Loveman, a chief operating officer who recently replaced Phil Satre as CEO, noted that a "domino effect" is in play, with states trying to contain entertainment spending inside their borders. If a casino opens in one state, the pressure builds on its neighbors to follow suit.
Still, industry experts are scratching their heads over a couple of dicey deals. Harrah's decision to take a 95 percent interest in Louisiana Downs and convert it to a racino could be a long-shot; the Bossier City/Shreveport market is weak and the $157 million price tag was relatively steep. Likewise, Harrah's merger with JCC Holding Co. in New Orleans; along with sluggish returns at the Rio Las Vegas, create drag on the bottom line.
So far, however, the Harrah's strategy of building brand loyalty is clicking nicely.