10.29.07
MotorCity: Room to compete?
Newest casino to rely on local appeal to draw hotel guests
By Daniel Duggan
When MotorCity Casino opens its luxury hotel next month, it not only will bring 400 more rooms to Detroit, it will begin a new era of hotel casino competition in Motown.
While Detroit's three casinos have been going at it for years, MotorCity and MGM Grand Detroit Casino L.L.C. will be competing for hotel stays as well.
MGM will use its national programs and management while MotorCity will rely on its local appeal.
Industry analysts and consultants expect battle lines to be drawn over the so-called high rollers — and who can do the best job of schmoozing them.
"Marketing a casino is totally different than marketing a hotel," said Bill Callnin, chairman of Virginia-based Cayuga Advisors, which specializes in casino consulting.
"They're not looking for a group to stay at the hotel for three or four nights. They're looking to offer comps to individual players, befriend them, impress them, and get them to come back," Callnin said.
In the gaming industry, gamblers who spend thousands of dollars during a visit are carefully cataloged in databases. Detailed information, such as game preferences, birthdays, restaurant preferences and favorite shows are kept on file at the properties.
Accounts similar to an airline's frequent-flyer program are used in gaming to track gamblers and offer promotions based on the amount of money spent. With MGM's national reach, it has a major advantage in Detroit, said Callnin.
"MGM has that database of hundreds of thousands of gamblers, and they will be telling them, 'When you're in the Midwest, make sure to stop by our property in Detroit,' " he said.
MotorCity COO Rhonda Cohen downplayed MGM's databases, emphasizing her company's local ownership by Marian Ilitch as key to understanding Detroit.
"MGM has made a big deal about bringing Las Vegas to Detroit," she said. "MotorCity is bringing Detroit to Detroit."
She said the architecture and design of the hotel reflect the city's industrial past in an effort to better connect with regional customers.
While MotorCity can't bring employees from Las Vegas for its opening as MGM did, it can impress people with ingenuity.
The hotel will use technology to cater to repeat customers. Details such as the room temperature and pillow selection — from the "pillow menu" — will be saved in a database and recalled for a repeat user.
Cohen also expects to have an advantage in offering packages that will have stronger appeal to regional gamblers — sports tickets packaged with hotel stays, for example.
MotorCity Casino cannot legally acquire tickets to Ilitch Holdings-owned Detroit Tigers and Detroit Red Wings games for a discount, Cohen said. But corporate attorneys are examining the legality of using tickets to the Ilitch-managed Fox Theatre for gambling incentives.
MGM officials have said publicly that the nature of competition in Detroit will be friendly. All the properties, after all, have a common goal of creating a new leisure travel market in Detroit.
Chuck Skelton, president of Ann Arbor-based Hospitality Advisors Inc., said the casinos will be like Wendy's and McDonald's, creating synergy for a similar product while competing.
"You're overlaying casino hotels in an area that has been 65 to 70-percent commercial travel-oriented," he said. "So the casinos are looking to create a significant amount of leisure travel for Detroit."
They have to create hundreds of thousands of room nights for themselves each year, something that didn't exist before.
MGM was the first to open its hotel, Oct. 3. MotorCity announced last week that its Nov. 1 opening has been delayed by ongoing labor negotiations, the state government shutdown, staff training and delivery of room furniture. It is expected to open mid-November.
Greektown Casino L.L.C. is expected to open its hotel next year.
Being the first to open is not crucial, analysts say, because it will take years for the properties to stabilize. Analysts predict enough gambling revenue for all three operations.
Callnin said the first casino in Connecticut was making $1 billion per year. When the second operation opened, most expected both to make $500 million.
"The truth was, they have both leveled off at $1 billion a year," he said.
Daniel Duggan: (313) 446-0414, dduggan@crain.com
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