Strategic Management. Casino Industry

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Introduction

Hospitality industry is often regarded as the key prerequisite for developing tourism and all the spheres, associated with it. Gambling business is closely associated with tourism, and, in order to increase the revenues, casino owners need to improve the hospitality sphere for attracting more visitors and tourists. In fact, this solution is suitable only for gambling zones and entertainment areas such as Las Vegas, Atlantic City etc, and it will not suit for small casinos which are not located in specialized areas.

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The aim of this paper is to analyze the possibility of improving the hospitality side of gaming sphere from the perspective of several aspects, such as political / legal, Economic, Social / Demographic, Technological and Environmental. These aspects will be regarded as the key analysis criteria for the hospitality in gaming zones.

Hospitality Overview

Hospitality as an industry is often analyzed from the perspective of attracting tourists and providing the largest number of employment opportunities. In fact, the importance of hospitality industry is explained by the increased opportunities of tourism, and for increasing the financial flows in the sphere of tourism and gaming. (Xu and Dong, 2004)

The image of gaming zones in Las Vegas have already formed, and it should be emphasized that Las Vegas, and Nevada in general are not regarded as the places for family rest. This is the territory of night life, erotic shows, adult parties, etc. The number of casinos reaches the point of 200. (Browne and Kubasek, 2007)

Atlantic City is regarded as the second largest gaming zone, however, the amount of casinos is ten times less. Atlantic City is regarded as the place for family tourism, as it is famous for sandy beaches, shopping centers. People can resort to active rest opportunities and sport activity in difference with Las Vegas which reminds of the largest casino ever, with shows, alcohol, gaming, and drugs available only. In spite of the lesser amount of casinos, the casino revenue is only 20% less in comparison with Las Vegas, as the hospitality sphere is better developed. (Brody, Lane, and Steed, 2004)

Political Aspects of Hospitality

Political and legal prerequisites that should be considered before improving the hospitality industry are closely associated with the necessity to reform the licensing system, considering the role of government in licensing and activity, improving the legislation in general, and the aspects associated with taxation.

Factor Overview Effect assessment
Licensing It will help to regulate the commercial activity associated with gambling and hospitality jointly. On the one hand it will restrict the activity of some business players, and, possibly, throw away some of them out of the market, on the other hand, it will be able to set up the set of standards and rules for serving visitors. (Fischer, Sheppard, 2008)
Licensing will require the adoption of the corresponding legislation. Hence, it will involve lobbying of particular business and political groups, which will inevitably cause the restructuring of business forces on the gaming market.
In general, the effect is positive
Role of government in licensing and business activity The changed role of government will be the double-end stick for business in general. On the one hand, if the role of the government weakens, the sphere will become poorly regulated, which will create the space for swindling.
On the other hand, if government increases its role in the sphere, additional financial resources will be required for financing the special control and legislation commission.
Hence, the role of government should stay the same, as additional regulation legislation does not presuppose the increased control over the industry in general.
Neutral, if stays the same
Taxation legislation Taxation is one of the most important aspects of any business. In fact, the taxation structure in Nevada is very loyal; hence, it should be changed in order to regulate the development of hospitality industry. As it is stated by Furlong (2004): “Nevada is proud to have the lowest overall tax rate of any state in the nation. There is no state income, inheritance, gift, or estate, franchise, inventory or corporate taxes are levied.” In the light of this statement, the taxation system should be reformed. Positive

Economic Aspects

Economic aspects are generally regarded as the closest for the business sphere, independently on its origin. As for the gambling industry, economic aspects will involve the following: NAFTA, Fall in US dollar, Low interest rates, Higher disposable income in general, Growing gap between rich and poor, Higher unemployment. (Lucas, 2007)

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Factor Overview Effect assessment
NAFTA Unification of the trade zones will not impact the hospitality industry, however, this aspect is closely linked with the aspects of unemployment. Hospitality in general is the business which requires unqualified personnel. Immigrants will help to solve this problem. Positive
Fall in US dollar Surely, this will lower the incomes of the business sphere, especially from the perspective of foreign capital flows. However, some currencies have also fallen; hence the losses will not be crucial. (Fisher, Arnold, 2003) Negative, closer to neutral
Low interest rates Interest rates associated with the gaming industry, and business development may be either the ruling or the breaking force of the industry in general. As for the low interest rates, this factor may be regarded as a simple barrier on the way to success in gaming and hospitality. Positive
Higher disposable income in general High income will be even higher if the hospitality sphere improves. The key aim is to attract more tourists, and families for positioning gaming zones as the places for family tourism and rest. (Lucas, 2007) Positive
Growing gap between rich and poor This factor will not play an important role for the developing industry, as even if visitors become richer, however, their number lessens, the final result will be unchanged, as less people will spend more money individually, however, the average income stays the same.
Higher unemployment It will be resolved by the increased number of immigrants. Anyway, hospitality sphere will create additional jobs

Social / Demographic Aspects

Demographic aspects are not crucial for business activity in general, however, some particular aspects may be the essential barriers for business development. (Tesone, 2007)

Factor Overview Effect assessment
Greater desire to travel In some measure this will touch upon the increase f tourists in gaming zones Positive
Concern for problem gambling The increase of tourists will increase the rates of illegal gaming. However, the improved environment for legal casino visitors may distract some attention from illegal gaming activity. Negative / Slightly Positive
Concern for security Security concerns will stay on the same level. Neutral
Concern about ‘sin city’ image associated with casinos, prostitution and drugs Casinos and gaming zones will have to change its image and positioning for attracting those who prefer travelling with their families. Negative for business
Rise in obesity levels This will probably make people think over the way they relax, and decrease the amount of gamblers. Negative for business
Ageing population While some prefer quiet rest, the others lake gaming Neutral
Party now, pay later mentality This approach tends to increase the incomes of casinos.

Technological

Factor Overview Effect assessment
Internet It will help to improve the advertisement activity of casinos Positive
Interactive gaming The amount of “alive” gamers may decrease, however, it increases the gaming opportunities, and people will have an opportunity to play without leaving their homes. Positive
On-line banking People are not restricted by the sum they can take with them Positive
Robotics. Sophisticated machine development Service will be improved, however, those who prefer communicating with croupier will be distracted (McKenna, 2007) Positive / slightly negative
Lighting and sound systems Entertainment opportunities will be improved essentially Positive

Environmental Aspects

Factor Overview Effect assessment
Water and energy consumption The increase of tourist amounts will cause the increased consumption of water, energy, food and other resources. Hence, the desert Nevada will have to invest the creation of increased capacities. Negative
Climate Change Climate change is an inevitable tendency, however, it does not seem to stop tourists. Neutral

Industry Analysis

Factor Overview and sub-factors Effect
New Entrants Changes in the business structure and images will cause the appearing of new entrants and diversification of business tasks. Hence, while casino competition is large enough, new entrants will be in the sphere of hospitality.
Product differences will be regarded as the key competition factors which will help to differentiate business participants.
Customer switching will be the inevitable, hence, the additional costs will be required for improving customer care policies.
Positive

Positive

Negative

Supply chain management changes Additional services. The changes of business image and structure will cause the appearing of new services. Business owners will require additional resources, needed for high quality hospitality services.
Cost regulation. Appearing of additional services will require the implementation of the innovative price regulation strategies. This will cause the standardized approaches towards price regulation and provide wider brand awareness within customers.
Threat of integration. Due to changes in supply chain management, some business players will have the same suppliers, which will inevitably cause horizontal integration, and ruining of diversification and brand awareness barriers.
Positive

Positive

Negative

Industry Rivalry Casinos and entertainment areas will change the service positioning strategies, which will cause the increased rivalry and struggle for visitors. Visitors will be the only group who will benefit in this rivalry, as the quality and the range of services should increase. Positive

Conclusion

Finally, it should be emphasized that gaming business development will require in depth consideration of numerous aspects, associated with hospitality, legislation, environment, technological development and social aspects. Hence, the business in general depends on numerous factors, and the development of hospitality industry for improving gaming business sphere may be regarded as the important and reasonable step for improving the quality of the services, and attracting more visitors, as a result.

Reference List

Brody, R. G., Lane, S., & Steed, E. 2004. The Development of an Accounting Performance Measure to Minimize Inter-departmental Conflicts in the Hospitality Industry. International Journal of Management, 21(3), 324.

Browne, M. N., & Kubasek, N. K. 2007. Should We Encourage Expansion of the Casino Gaming Industry?. Review of Business, 18(3), 9.

Fischer, A., & Sheppard, J. 2008. Financial Institutions Fraud. American Criminal Law Review, 45(2), 531.

Fisher, J. F., & Arnold, M. J. 2003. Uncertainty in the Gaming Industry: Lessons from Missouri. Review of Business, 18(3), 14.

Furlong, E. J. 2004. A Logistic Regression Model Explaining Recent State Casino Gaming Adoptions. Policy Studies Journal, 26(3), 371.

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Lucas, R. E. 2007. Employment Relations in the Hospitality and Tourism Industries. New York: Routledge.

McKenna, P. 2007. The Politics of Gaming in the “garden Province”. Journal of Canadian Studies, 41(1), 51.

Tesone, D. V., & Ricci, P. 2005. Attributes of Entry-level Employees: Hospitality and Tourism Managers Seeking More Than Knowledge and Skills. Journal of Applied Management and Entrepreneurship, 10(2), 3.

Xu, K., & Dong, Y. 2004. Information Gaming in Demand Collaboration and Supply Chain Performance. Journal of Business Logistics, 25(1), 121.

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