Casino Comps Explained and Defined
Comps and reduced prices are mainstays of the food and beverage department's marketing plan. It is thought that in the typical hotel/casino, one-sixth of its food sales and one-third of its beverage sales are comped.
A hotel casino must have liberal pricing policies if it wants to achieve its food and beverage department objectives. Comps, competitive prices, and high perceived values are necessary to attract and retain gaming guests.
A hotel/casino's food and beverage department is usually not considered a profit center. Its function is mainly to support gaming, and it is usually expected to lose a bit of money. This strategy was developed many years ago and is followed to some degree by most hotel/ casinos.
The loss-leader philosophy suggests that a customer usually has a set budget when he or she visits a hotel/casino, and that this budget must be used to cover transportation, food, room, beverage, gaming, and incidental charges.
If the customer has, say, $500, to spend, and if the hotel/casino charges $200 for non-gaming activities, he or she will have $300 to lose in the casino.
But if the hotel/casino charges only 100 for non-gaming activities, the customer has 400 to lose. In the long run, this customer will leave $500 at the hotel/casino, one way or another. It is thought, though, that a guest will perceive a greater value if the bulk of his or her budget was spent on gaming.
This philosophy survives today, albeit in several variations. For example, some hotel/casinos may reduce heir food and beverage price subsidies, but retain free self-parking, valet parking, entertainment, and souvenirs.
Other properties may use creative advertising to distract guests from the total prices they must pay for food and beverage. For instance, a hotel/casino may advertise a $3.95 all-you-can-eat buffet, but tack on an extra charge for soft drinks.
The property may also reduce food costs at the buffet by issuing a ticket to guests, with which they get only one serving of meat, seafood, or other specialty items, but can freely consume other foods.
These creative revisions of the original philosophy came about because the basic comp policies were abused in many hotel/casinos. Managers were handing out comps indiscriminately to friends and relatives who were not gaming guests and therefore, could not justify receiving them.
Comp policies are also revised occasionally because guests are not restricted to one hotel/casino--- they can take their gaming dollars across the street.
Consequently, the guest with the $500 total budget will not necessarily drop it all in one place.
Hotel/casinos have become more careful when doling out comps and reduced prices. For instance, many properties today use electronic 'tracking systems' to record players' average bets, average playing time, and so forth.
This allows management to determine more precisely the types and amounts of comps players should receive.