Reno's gaming industry traditionally
braves its fall-winter slow season by lowering
its already relatively low room rates to
lure visitors. From November through
February, occupancy rates fall in northwest
Nevada's 27,257 hotel, motel, RV park,
condo/timeshare and 28-day rental rooms.
Inclement weather remains a traditional
seasonal concern for the industry, just as it
was before Interstate 80 the main
pipeline to the northern California visitors
market replaced old U.S. 40, ending
fear of days-long snow closures. Foul
weather still can harm casino marketing
off-season efforts, including direct-mailing
advertisements for vacation packages,
entertainment and tournaments.
"You can spend a hefty amount of
money on promotions and advertising, and
all it takes is one snowstorm and your
money's practically down the drain,
because you can't force people to drive over
the hill," says Kimberly Tolkien, director of
marketing for the Atlantis Casino Resort.
With about 54 percent of visitors driving a
car, truck or RV to get to Reno, and about
another 10 percent coming by motor coach
Reno is "a drive market, predominantly,"
Tolkien notes.
But a year-round concern, year in and
year out as traditional as worries about
the weather is whether low room rates,
are harmful to the market.
"This discussion has been happening
for probably the past 20 years," Tolkien
says. Reno has a relatively low ADR
average daily rate for rented hotel
rooms. The Biggest Little City's ADR for
2001 was $57.90, which was 73 percent of
the national average: $79.66. Reno's rate
rose 2.9 percent from the $56.20 in 2000,
but hasn't grown significantly in recent
history, Tolkien says.
"That's bad.We're spending more
money on our properties, we have higher
costs of operation, and not an increased
ADR to show for it.With lower room
rates, really no one benefits. The consumer
benefits, but only the short-term. If you
can't continue to improve your property
and town, what are they going to come
back for? It's a short-term quick fix and
really doesn't do anything for future
growth."
Visitor count is essential to gaming revenue.
When more visitors among the
region's annual 5 million-plus guests are in
the Reno and north Lake Tahoe area,
more money is taken in at casino tables
and slot machines. July, August and
September historically are among the four
months with the highest number of
tourists in Washoe County, and
November, January and February are
among the four lowest. Comparing tourist
counts (provided by the Reno-Sparks
Convention & Visitors Authority) and
gross gaming revenue totals (provided by
the state of Nevada Gaming Commission)
for those months for the years 2000 and
2001 shows the more visitors to the county,
the more money taken in from gaming:
* When there were 1,405,014 visitors
from July through August 2001,
$297,212,281 was left on gaming tables
and in slot machines, while the months of
January, February and November 2001 saw
1,068,314 visitors and a gaming win of
$229,915,134.
* When there were 1,484,797 visitors
from July through August 2000,
$317,345,570 was left, while the months
of January, February and November 2000,
which saw 1,103,165 visitors, the gaming
win was $244,868,608.
Hotel-motel occupancy rates generally
correspond to the up and down seasons for
visitors. July through September 2001 had
76 to 79 percent occupancy, compared to
61 to 71 percent in November, January
and February 2001. July through
September 2000 had 76 to 81 percent
occupancy, compared to 58 to 70 percent
for November, January and February 2000.
Reno-area lodging prices generally are
much lower in the off-season than at the
height of tourist season. (See sidebar)
But does lowering room rates actually
fill up rooms?
It's a tricky topic, says Reno-based
gaming consultant Ken Adams.While it's
unclear where to draw the line on raising
rates without dissuading customers,
Adams says, he believes higher room rates
actually could fill more rooms. He cites the
Atlantis as an example.
In the third quarter of 2002, Atlantis
room rates went to $66.52, about a 10 percent
rise over same period in 2001.
Occupancy in that period went up 1 percent,
from 96 to 97 percent.
While much of the Reno casino industry
has followed the logic that lower room
rates generate higher occupancy, Las
Vegas' industry has defied that reasoning
by increasing its room rates and its occupancy,
Adams says.
"I come down on the side of higher
room rates. There's a perception that the
price is related to quality and value," he
says. "Higher room rates would communicate
a greater value. It would be to Reno's
advantage if a higher room rate could generate
the same amount of occupancy."
One benefit of successfully implementing
that strategy would be increased revenue
for the room tax-supported RSCVA
with which to market the area, Adams
says.
With Reno facing an ongoing challenge
of competing against the spread of
legal gaming across the nation including
Indian tribe-owned casinos in nextdoor
California increasing the number
of overnight visitors to the Reno-Tahoe
area is the key to boosting the region's
tourist economy, says Deanna Ashby, the
RSCVA's executive director of marketing.
To increase visitation means selling the
Reno-Tahoe area as a place for a total
vacation experience, Ashby says. Visitors,
for example, could ski, enjoy a spa, shop,
dine and gamble all in the span of a
two-day vacation, she says.
"The RSVCA's position is to market
ourselves as 'gaming plus.'"
