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The Honolulu Advertiser
Posted on: Monday, September 29, 2008

Harrah's keeps close tabs on habits of visitors

By Oskar Garcia
Associated Press

Hawaii news photo - The Honolulu Advertiser

Marlene Lynch, of Keyesport, Ill., inserts Harrah's Total Rewards card before playing a slot machine at the Caesars Palace hotel and casino.

JAE C. HONG | Associated Press

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LAS VEGAS — Harrah's Entertainment Inc. — long known for using detailed customer tracking to keep players coming through casino doors — is about to get a lot more data to tinker with.

It's no longer just what game you play, how much you wager and how long you spend at the table or slot machine. The world's largest gambling company by revenue now wants answers to other questions about your stay: Where and what do you eat? What do you buy in the shops? Enjoy magic, concerts or just a good cocktail?

Those insights will help Harrah's get even more specific with its promotions, and possibly help the company make big decisions about how it designs and manages its hotel-casinos.

Harrah's data comes from its customer loyalty program, Total Rewards, which gives bonuses to gamblers in exchange for letting the company track betting habits through the use of membership cards, which transmit data to computers so it can be analyzed. The company said it tracks about 80 percent of its gambling revenue through Total Rewards.

"(Harrah's) invested a significant amount of time and effort and money to develop the program and it's regarded as the best," said analyst Robert LaFleur of Susquehanna Financial Group. "They know more about their customers than probably any gaming company knows."

Now, the program has expanded to offer customers rewards without gambling, giving the company new data to mine about its patrons away from the black jack tables and slot machines. Harrah's will reward customers for spending on entertainment, restaurants and other services at the same level it rewards betting on slots.

"A whole host of possibilities," said David Norton, vice president of marketing for Harrah's, depending on what the company finds out.

For example, a concertgoer who sees a country show at the Whiskey Roadhouse at the Horseshoe Hotel-Casino in Council Bluffs, Iowa, might get free tickets to see Tim McGraw the next time she visits Las Vegas. Golfers in Biloxi, Miss., who frequent the company's Jack Nicklaus-designed course there could get free green fees if they go to Atlantic City.

LaFleur said Harrah's, which owns or manages 50 casinos, will certainly benefit if it can improve its knowledge of its customers.

"Harrah's always had the advantage that it just had so many pins in the map that they could really move players around and get them in multiple places," LaFleur said.

Past data from the loyalty program, which includes roughly 40 million members, has let Harrah's officials test what kinds of offers better entice specific gamblers to return.

Beyond settling debates such as food vouchers versus gambling credits, Norton said the company used data from Total Rewards to build Asian-themed playing areas in certain casinos after tracking the tendencies and volume of Asian-American players from San Francisco, Chicago and Los Angeles.

Harrah's also added a tier on the highest end of the rewards program after learning its biggest spenders were still gambling elsewhere to earn standing in other rewards programs, Norton said. It added trips, gifts and exclusive services to gamblers who play $500,000 or more per year on slots or $1 million per year on video poker. Credits for table game play varies depending on the game, the average bet and the amount of time a player spends at the table.

Total Rewards also contributed to Harrah's decision to buy Caesar's Entertainment Inc., after customer surveys of its high-end gamblers revealed they were staying in other Las Vegas resorts even though they gambled on Harrah's properties.

The deal made a revamped Caesar's Palace the company's centerpiece resort, and made Harrah's owners of Paris, Bally's and the Flamingo.

Harrah's took in $10.8 billion in total revenue in 2007. Of that, $8.8 billion came from gambling, while $2 billion — 18 percent — came from other sources, including hotel rooms, food, drinks and entertainment, according to a statement filed with the Securities and Exchange Commission.

Other major casino companies have historically done more to attract non-gambling customers, branding properties as luxury escapes, good meeting places for business and homes to top shows and celebrity chefs.

Norton said non-gambling revenue already has outpaced gambling revenue the past few months and is the area where the company sees the most potential for more revenue, even as casinos struggle to maintain visitors and grow in a rough U.S. economy.

Harrah's reported losses of $285.4 million for the first six months of 2008, compared with profits of $422.8 million in the first half of 2007.

Analyst Andrew Zarnett of Deutsche Bank said in an investors note that more revenue declines are expected as the economy puts even more pressure on consumers.

David Schwartz, director for the Center for Gaming Research at the University of Nevada, Las Vegas, said a shift by Harrah's to track its non-gambling customers signals a play for new customers the company needs to attract, such as conventioneers.

"It's a bit of a departure but this is really where the industry is heading," Schwartz said.