Las Vegas Sands: Providing a Good Customer Experience

This is a follow up to my previous article Las Vegas Sands Hasn't Folded Its Hand Yet

Last month, I traveled to Las Vegas to visit and observe Las Vegas Sands (LVS) (Venetian), Boyd Gaming Group (BYD) (Orleans, Coast Casinos), and several other properties on the strip. Given that the first weekend of the New Year is traditionally a very busy one for Vegas, I decided it would be the perfect time for a follow up. I opted to stay at the Venetian for this trip to get a better inside look at the customer experience and staff attitude as the hotel hosted the New Year's crowds.

On January 1st, I arrived at the Minneapolis airport and, as I checked in, inquired how full the flight was. As someone who has flown to Vegas over 30 times, I've found it to be oversold about half the time. I was told that my flight was full, but not oversold.

I arrived in Vegas around 5pm and jotted down observations as I made my way from the airport to the hotel. The train ride from the Northwest Airlines terminal to the main terminal was about half capacity, less crowded than expected. The car rental agency was not busy either but did have small lines. I picked up my rental car and navigated my way to the Venetian through the traffic on the strip (which was busy, as usual).

When I arrived at the Venetian, the front entrance was so crowded I had difficulty finding a valet. Once finally inside the hotel, I was greeted by an enormous check-in line mired in a maze of ropes and poles. Apparently the Venetian expects guests with the means to stay anywhere to wait in line to get to their rooms. I periodically did head counts of guests waiting in the check-in line during the course of my stay.

I had booked a suite on the concierge level, so I was mostly able to avoid the lines. I approached the concierge desk to check in, but found the staff busy helping other guests. I was, however, offered a drink and a place to sit while I waited my turn. The check-in procedure itself was quick, painless, and included a brief tour of the lounge and other amenities the hotel offers.

My suite was ok, but not quite what I consider a suite. It was a large room with a few stairs leading up to an elevated level separated by a half-height rod iron fence. For entertainment, the room had two very large flat-panel TVs, which were very nice. There were apparently extra fees for internet access, however. I'm not sure if this is a simple oversight by the hotel or if they actually expect their premium guests to pay for internet service, but the Venetian is the first hotel I have encountered that does not offer internet free of charge to concierge level rooms.

The quality of service that the concierge staff provided was above and beyond my expectations. Their attention to detail, as well as their professionalism, revealed the staff members to be of the highest caliber, the gold standard that other hotel staffs should strive to reach. Granted, I'm not a very demanding customer, but every request I did make was met with an effortless, can-do friendly attitude.

I did a walk through of the canal shops, finding them busier than they were during my tour in November, but by no means impressively busy. I also did several head counts during my walk-throughs of the casino floor and found them to be weekend standard busy, as usual. Both the machines and the card tables appeared as they normally do on the weekends, though the craps tables seemed to draw lighter crowds than I'm accustomed to seeing. I also did several checks of the large poker room and found that it usually had a waiting list, even late at night. The sports book was very full, impressing me with how many people were crowded into the room. The reward player sign-up location had a considerable line each time I checked, except late at night.

The tables games had what I would consider to be a relatively high "smile ratio." While walking through casinos, I note the number of smiling versus non-smiling dealers. In most casinos on the strip, I typically see over 20 dealers not smiling for every one that does. In off-strip casinos, so few dealers smile that it's easier count the few that are smiling instead. The Venetian scored relatively high in this regard, rating 10 non-smiling to 1 smiling dealer during my random samplings of the staff working the tables during my walk-throughs. For comparison, the best ratio I have observed was at the blackjack tables at Harrah's. In their section where the dealers dress in street clothes, loud music playing in the background, I noted every third dealer smiling at the customers.

My dining experience at Woo's Chinese restaurant left something to be desired, as the staff seemed unable to adequately accommodate its guests. For my dining guest and I, over an hour and thirty minutes elapsed between being seated and getting our check, and the restaurant was only half full. It took so long for the guests at the next table to have their order taken that they left the restaurant after finishing their complementary water. Following our meal, the waiter took it upon himself to assume a 15% tip and add it to the bill, which I found presumptuous to say the least. My experience at The Grand Lux Cafe was, in contrast, very good. The staff was friendly and attentive and the service was quick.

On Sunday morning at 6am, I checked out of the Venetian. Once again, working with the staff on the concierge level made this a very easy and pleasant experience. In the course of my stay I asked guests staying in regular rooms what their thoughts were and uniformly they stated that they were also satisfied with their experiences and the standards of the hotel and that they were indeed enjoying their stay.

In total, my first hand observations were consistent with my previous analysis. I believe the LVS stock is being incorrectly priced below its true value. Furthermore, LVS announced this week that funding for Singapore is complete and revenue is expected to appear by first quarter 2010. I may travel to Macao to check progress on construction and assess the impact of the Chinese restrictions on visas, which were not firmly in place during my last visit. Sooner or later, the Chinese will see the error of trying to micromanage such things, but the wait could be a long one.

Although LVS has seen its lows and it may be a bumpy ride up, I feel bullish in my risk versus reward analysis. I predict the price will more than double by the start of 2010, with most of the gains occurring in the second half of 2009. The very recent price action suggests the market also believes that LVS will weather this storm and emerge with nice gains for those willing to chance the possibility that LVS will fail. I intend to write put options against a fall in prices, as well as accumulate more of this stock during dips. I think the upside potential outweighs the risk of failure, especially with Singapore coming online.

Disclosure: Long LVS.

Comments

[VegasCasino...:]

I did very much the same walk through observations as you on my last trip to the strip, 3 weeks ago. While I did find what you have mentioned, slightly before average crowds in SOME places, what you didn't mention is what they were doing with their money. People are eating at buffets and coffee shops instead of Emeril's or Wolfgang's. They are drinking at the casino bar instead of at the Ultra Lounge and they are staying for free or dirt cheap instead of paying top dollar the Venetian is used to charging.

I believe the Venetian is actually going to fare worse than some of the other places on the strip for 1 very important reason, Mr. Adelson's extreme unfriendliness towards gamblers. Right now, this is who the Strip needs, people who come to play regardless of economy and the Venetian has been downright hostile to gamblers for some time with poor games, bad table game rules and ridiculously high comp requirements. By contrast, Wynn has installed good games and is aggressively courting even mid-tier gamblers with free/discounted rooms. If you have a $5000 bankroll, where are you going to take it?

Jan 13 10:22 AM

[mister-ugly:]

just left vegas was there before fiesta bowl and for the national championship game. hilton was extremely busy for bcs bowl. southpoint had flat track motorcycle races last weekend and was busy. games and all restaurants. avn show was quiet because they charged entry fee of $125.00. dinner and awards show $85.00. i went in for free compliments of business exhibiting and found it unlike the past tame and quiet. left and went to motorcycle auction at southpoint which was active and well attended. palazzo is upscale not the venetian. the author needs to get the facts straight. next door to venetian and attached to sands. newer property owned by lvs. sunset station was very busy on friday night. arizona charlies on boulder highway was too. so the local places contrary to what local newspaper says were busy on the weekend. room prices have been reduced to reasonable levels, comparing the un-affordable levels of the last two years is not relevant. over-all vegas is hopping. revenues are down as are room prices. slots are busy. buffets are full. its a over-weight paradise for many and will stay that way.

Jan 13 12:44 PM

[emperorsten:]

What did all of this cost? Plane tixs, room, dinner? What were the stakes at the tables? Higher, Same or lower then usual? What was the crowd. American, Asian, Euro? Did places have enough people to service the crowd?

Jan 13 06:38 PM

[Robert Wein...:]

I have not noticed a change in air from MPS to Vegas over the past three or four years except maybe a little bit higher. The room rates are at the lowest levels I have seen since right after 9/11. Table stakes are somewhat lower. I have seen $10 craps and blaickjack at the Venetian which shows that they have small stakes available which also shows that they gaming is softer than perhaps two years ago. The crowd was thinner but still busy. It appeared to me that the staff level was neither too large or too small. I never had the impression that the Venetian was short staff compared to my other visits and the standard for Vegas. My most important question that I wanted to answer for myself was "does this appear to be ready to go under?" That question for me is a "no" and so I am a seller of put options and a buyer of stock. One read of my blog and its pretty clear that I am a hardcore shorter of stocks. Well over 90% of my trades are shorts so if I thought that LVS was about to fail I would be the first to short the stock. At this time I am comfortable with my 'bets' that LVS will not go under and stay under $5 per share. We already know Las Vegas is very good at separating customers from their money. I also believe that with the quality of management in Las Vegas that they will figure out what it takes to get the customer in the door. Detroit should take lessons on how to execute and build brand value.


On Jan 13 06:38 PM emperorsten wrote:

> What did all of this cost? Plane tixs, room, dinner? What were the
> stakes at the tables? Higher, Same or lower then usual? What was
> the crowd. American, Asian, Euro? Did places have enough people to
> service the crowd?

Jan 14 12:24 AM

[VegasCasino...:]

On Jan 14 12:24 AM Robert Weinstein wrote:

> I also believe that with the quality of management in Las Vegas that
> they will figure out what it takes to get the customer in the door.

Sadly, I don't have the same faith as you in the LVS management team. They succeeded when it was impossible to fail. Now that actual management is required, they are flailing. What have they done to garner such confidence? Their business model was built on selling rooms mid-week to conventioners at $300 a night along with the accompanying expense accounts to pay for 5 star dinners. Those people aren't coming anymore and he chased away those that are still coming. Whats the old saying? Be careful of those who you step on, on the way up. They are the same people you will meet on the way down. Mr. Adelson is on the way down and the gamblers he thumbed his nose at for years now are having the last laugh.

Jan 14 01:37 PM