Loyalty Gone Wrong in Las Vegas

The first challenge in the casino business is getting customers to walk in your front door. Casinos have spent billions of dollars building casinos that appeal to the senses, keeping customers in awe at every turn. But once you're in the front door casinos, like to keep you there with free drinks, dinner and rooms. As Las Vegas changes, casinos are making an effort to change along with it -- not always with the best results.

MGM Resorts (NYSE: MGM  ) is making an effort to transform the way Las Vegas doles out rewards, but is it too little, too late? MGM's M Life program, which is just now making its way to Las Vegas, will give personalized rewards, with comps that members can pick from the program's website. The program aims for more control, more options, and more reasons to spend money at MGM Resorts.

Nightclub operator SBE has even agreed to redeem MGM reward points at some of its properties, and to allow customers to build MGM points at SBE venues.

Missing the point
On the surface, MGM's efforts look like a step in the right direction. Las Vegas Strip casinos now get 60% of their revenue from non-gambling sources, so giving customers rewards for dining, shopping and gambling makes a lot of sense. But the execution has been anything but smooth. With the launch already delayed, the blogosphere has been ripping the M Life program, questioning whether MGM has any loyalty for its customers.

Eliminating new resort fees may help MGM retain customers more than a new loyalty program will. MGM Grand greets customers with a “hidden” $18 fee for a bunch of amenities they're unlikely to use. Of course, MGM isn't alone here. Wynn Resorts (Nasdaq: WYNN  ) charges a hefty $20 fee, and Las Vegas Sands (NYSE: LVS  ) adds $17 to every night at The Venetian. I guess I'd tend to be more loyal if I knew a resort wasn't trying to screw me out of a few dollars at every turn.

There seems to be a disconnect between casinos and customers about what loyalty is. If MGM can figure it out, they may have a better chance of surviving, and create more of the kind of goodwill that Las Vegas needs to turn the corner this year.

M Life is a nice try, but MGM has to do more than give me a pretty website to win me over.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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  • Report this Comment On January 08, 2011, at 4:22 PM, multi007 wrote:

    I wish there was some analysis on the CEO's comments on Squawk Box on 1/7/11 in the morning. But the article does stay true to its title.

  • Report this Comment On January 09, 2011, at 4:23 AM, eatmeee wrote:

    How clueless. No comment about fundamentals or business model or the recovery for casinos. just another useless analyst with a personal agenda in my view. You guys are obsolete, nobody gives you credibilty because you only make safe calls and when you do step out there, most of you are wrong and clueless, much like this irrelevant piece.

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