Can You Afford to Skip the Casino Feasibility Study?
The desire to build a casino is often motivated by the availability or suboptimization of hotel space, needing to fill a gap in hotel occupancy, or the availability and cost of a license under a tourism investment plan. Too often, the idea becomes too much. The next steps are to create a casino design that fits the team’s vision of what players want and then start construction. After that comes the search for casino management.
It is because there are common misconceptions regarding casinos and gamblers that lead developers to fall into traps all the time. The problem is that there are common misconceptions about casinos and gamblers. Let’s examine how the most successful operators approach it. They begin by understanding the market. This includes its willingness, size (for all entertainment), disposable income, market-specific requirements, compatibility of player profiles with other hotel, resort, or entertainment complex users. This information is used to determine the potential visitors and their frequency, length of gaming sessions and average stake.
The projections of the equipment requirements, floor area and operating time are further extrapolated. Finally, financial spreadsheets will be created to support and consider profit, capital spending, and returns of investment. Not just about the numbers, but also how to optimize the opportunity and eliminate any fatal flaws. The feasibility will also focus on the requirements to compete in the market. The feasibility doesn’t need to be expensive and time-consuming. It does not require a renowned academic to do it. Understanding whether you have an unremarkable glass chip or a rough diamond is enough in the early stages. A professional casino consultant will be capable of delivering an initial feasibility for a reasonable amount in as little time as 10 days. Not only will it provide a decision point for your idea or opportunity, but also providing a framework for future screening. Let’s review some of the pitfalls.
The myth of “license to make money” is very popular. It prevents people from performing all the necessary due diligence and care required to screen potential restaurants or shops. These are just some of the examples that spring to mind. A large casino was created in a place that places restrictions on the maximum stakes of slot machines. The casino’s viability was heavily dependent on the revenue potential of the slot machines. The revenue capacity model, which was developed by an experienced manager and ran on the slots a few days prior to opening, showed that it was physically impossible to generate the necessary income due the sheer number of machines mega888. Naturally, the casino fell short of expectations. A US-based casino operator built a huge casino in Britain that was not able to recognize the need for live gambling or the mobility among players. However, a British company made a spectacular failure in Las Vegas by failing to understand the customer and making fatal design mistakes.
Another popular myth about players and casinos is the “James Bond” image. The Pareto Principle heavily applies to casinos where approximately 80% (or greater) of the revenue is generated by 20% (or lower) of the visitors. This 20% does NOT include people who dress up for the occasional night out. The Pareto Principle is more applicable to frequent visitors who feel at home in casual and comfortable clothing in casinos. The “non James Bond” casino players are a constant source of concern for the 5-Star Hotel manager. “Where’s that casino manager, he’s obviously got this all wrong…” And on goes the conflict-of-interests. The feasibility study will allow the corporation the opportunity to identify conflicting circumstances and create solutions.
I am reminded of an incident when executives proposed the establishment of a large caravan camp on the grounds a destination resort casino resort. The resort is located approximately 2 hours drive from major cities. The resort had the only casino located within four hours driving distance of the city. The CEO harshly reprimanded the executives as they presented their well-planned and detailed plan for increasing footfall to resort. They failed to realize that the hundreds upon hundreds of caravans along the road would delay the 20% that generate 80% and the importance of such a shortening the gaming session!