+++++++++++Elisa Hink 640
Nov 21 2:31pm
Reply from Elisa Hink
What factors shoul

+++++++++++Elisa Hink 640
Nov 21 2:31pm
Reply from Elisa Hink
What factors should be considered prior to implementing a pricing strategy?
Pricing strategy should be influenced by budgeted margin or EBITDA, cost of operations, and guest satisfaction.
-Ultimately, within a hotel environment, there are static costs that make yielding easier for maximizing margin – generally speaking, cleaning an average room will have the same cost associated with it (labor, supplies) and booking patterns often provide good guidance on staffing levels. Restaurant and entertainment venue costs will vary and be dependent on market value of food / beverage materials in the former and artist costs for the latter (someone who is really hot in 2024 might plummet in popularity in the following years, which will drive their cost down). Considering Driving revenues within a set of budgetary expectations will mean considering all of these factors and their elasticity and setting a conservative buffer for the business to operate within; the biggest challenge with this, though, is…
-The ability of a business to provide consistent guest experiences that drive reputation, repeat and new business, and potential for growth. When setting out a pricing strategy, going too aggressively into cost-hawking can lead to subpar experiences for consumers – things like poorly-maintained public spaces, old room furnishings, limited food menus, etc. can impact a perception of value and completely tank any pricing strategy because you will end up with no customers regardless.
What types of dynamic pricing strategy would you consider for your establishment if it was in a prime location like the Las Vegas Strip?
Dynamic pricing someplace like The Strip is always going to be challenging – with 40 million visitors a year, it’s hard to convince operators to not just go for the jugular with the knowledge that anyone complaining about price will just be backfilled by another guest. The hotel business is built on the implementation of dynamic pricing – customers anticipate paying different prices for rooms by date of stay and room type. F&B utilizing this, though, is a newer feature – the constant upward tick of sides in steakhouses is a clear indicator of this; a menu from Jean-Georges Steakhouse in December 2019 had all sides priced at $17 while an August 2024 menu featured a variety of prices. The Black Truffle Mac & Cheese is featured on both, but costs $22 today. Its sister steakhouse at Bellagio, Prime, features a plain Mac & Cheese for $24. These are beyond belief and it is hard to believe that the costs of labor and goods are so oppressive that this is necessary pricing while also reporting a Q3 net income of more than $191 million for F&B overall (MGM Resorts, 2024). More broadly, the overall risk of losing customers who might have been more frequent users is high – maybe they only come once a year rather than twice. Dynamic pricing has to be implemented thoughtfully and carefully to preserve guest trust; targeting specific menu items (maybe the Top 10 of a product mix) on peak sales days could be an easier way to implement this without stressing guest sentiment.
Mini case: As Las Vegas is anticipating the 2nd annual Formula 1 event to take place later this week, hotels around the Strip are ready to welcome an estimated 100,000 daily event attendees. As the hotel occupancy rate is increasing and inventory is becoming limited, prices have doubled, even tripled from their standard rate… the reality that this event comes with an astronomical price tag for the consumers, would lowering the room rates during F1 week be beneficial in creating and maintaining repeat customers for the remaining 8 years of the event deal? What effects can this have on the company brand’s image?
I feel uniquely qualified to answer this – my entire job for the last two years has basically been about how we “do” the race at MGM Resorts (I am literally sitting in my office in this small gap of time, drowning in a sea of credentials and unanswered emails, texts, calls, and TEAMS messages for people needing something to do with one of our F1 activities after many, many days in a row this month of trying to wrap up for this year). It is probably worth pointing out that properties on the Resort Corridor have lowered rates in a very meaningful way this year compared to last and that this was a conscious decision – last year, everyone was yielding 2-3x a NYE rate, but this year many are in line with what would be charged for NYE and others are merely priced like a busy Saturday. I would argue that fighting supply-and-demand economics won’t encourage more last-minute bookings; in 2023, rates dramatically dropped close to the event to fill beds, which served to enrage customers who had booked early. Trying to get early bookings is far more beneficial, especially in an event that spans this many days and has so many activations and ancillary events planned with it to coordinate in the right locations. Getting a roster of repeat customers for an event like F1 also becomes more nuanced in Las Vegas because of our dependence on casino clientele to attend and play – if we all decide getting F1 fans is the priority, we may not actually be able to generate as much casino business holistically because they might not play. F1 fans should come because the event is awesome and the race is really fun, but Vegas is still a gaming destination with its futures reliant on a few really big (and a couple hundred not as big, but still big) gambling customers to keep the lights on. This is the same challenge for, say, the Super Bowl; but there is only one Super Bowl a year, unlike F1, where there are 24 Grand Prixes around the world to choose from, so sensitivity is more easily tapped with a comp set in places from Monaco to Shanghai.
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Andrey Drachyov
Reply from Andrey Drachyov
As a casino manager, I’d like to include full baccarat on the gaming area after analyzing what cluster of customers brings the main revenue. If I have a property with strong regular Baccarat players base and preferably enough in high rollers side The game will be a valuable add on to the casino floor. A few benefits possible to gain:
High Revenue Potential: Full baccarat lends to high rollers betting substantial bets for high revenues. The potential gains outweigh the risks if managed properly.
Prestige and Appeal: Baccarat is synonymous with luxury and high stakes, enhancing the casino’s image and attracting affluent clientele. It can serve as a draw for VIP guests, enhancing overall brand prestige.
Customer Experience: Offering full baccarat caters to a broader spectrum of players, including those seeking the traditional high-stakes experience. This diversity can increase customer satisfaction and loyalty.
Competition Differentiation: A full baccarat variant will distinguish the house from other casinos offering only mini or midi variations. This might be the way to gain a competitive advantage in attracting high-stakes players.