how much does a comped room cost the house?

Frankly, I think the industry is in trouble because it became a playing ground for the MBA types and all their profit center analysis. Back in the good old mob days, they never have quite existed as strongly as we would like to believe, the mob had only ONE profit center: The Casino. There were no other concerns ever.

Rooms in downtown hotels were ten dollars. Rooms on the Strip were 18 and up.

But always the casino was the only bottom line there was.

Mirage opened with a "nut" of a million dollars a day but cleared that twice over their very first day. All the Mega Resorts had MBA types who wanted hotels and restaurants to make money. Now you've got people opening up nightclubs and dayclubs and restaurants that are blind to a casino. They are serving the Yuppies who just happen to be in a town that has casinos.

So now there are cost accountants involved and someone actually looks at the price of shampoo instead of the price of not having shampoo.

Quote: FleaStiff

But always the casino was the only bottom line there was.

I think if you look at the numbers for 1970

6.79 million visitors
4 million enplaned/deplaned air passengers
25K rooms
70.0% occupancy
4.6K cars oer day from California
$369 million gaming revenue for Clark County

I think that they could have expanded on that business model to the massive levels that they reached in 2007.

Quote: pacomartin

I think that they could have expanded on that business model to the massive levels that they reached in 2007.

But instead they added huge resorts, shopping malls, multi-million dollar showrooms, and celebrity chefs all of which raised the cost of just walking in the door.

Quote: kp

But instead they added huge resorts, shopping malls, multi-million dollar showrooms, and celebrity chefs all of which raised the cost of just walking in the door.

But that old style kernel of business that existed in 1970 is still available today. Many of those 25K rooms that existed in 1970 have been torn down, but they have been replaced with rooms that follow the old business model.

Downtown Vegas has a similar ratio as the strip of 3 sold rooms per 1 comped room. But their "nut" to cover expenses is about $277 a day per available room. I am not sure how to correct that to 1970 for inflation, but it is probably about the same. You can still get cheap drinks while gambling, and nosh on $8 prime rib dinners. Most of the profit is derived from the casino.

There are about 9.5K rooms downtown. But if you include North strip, Palace station, Terrible's, Imperial Palace, Flamingo, Bally's etc. You get back to around the 25K rooms available in 1970.

You don't have those high rollers on Fremont Street like you did in 1970, when Vegas was the only legal place in the country to gamble.

Quote: whatme

I was told by mgt and ran the numbers my self its about $32 for an average room/hotel for the upkeep not including the land.

I have heard the figure $10. It depends on the user, too. How big a mess they make, use both beds, dirty all linen, take home all the toilet items every day, utilize room service every day, etc.. I personally do none of those. I leave the lest signature I possibly can if I'm treated well.

Quote: dm

I have heard the figure $10. It depends on the user, too. How big a mess they make, use both beds, dirty all linen, take home all the toilet items every day, utilize room service every day, etc.. I personally do none of those. I leave the lest signature I possibly can if I'm treated well.

Excuse-me for the question, but where have you heard it?

I imagine hotel associations outside Nevada have some of this information though I'm sure its nowhere near as precise as they pretend it is. In Vegas the questions is What is the cost of our NOT comping this room. Losing a "good customer" (ie, frequent and consistent loser) is not good. But the viewpoint is skewed in Vegas. Remember that Imperial Palace construction edict: Nary a bathtub any where in the place! He wanted gamblers in the casino, not relaxers in their bath tubs. Cost of the water? Never entered his head. Costs are reflected in the casino's bottom line, not in the water bill. Its probably the same way with towels and robes and soap wrappers ... a room is cheap.

Quote: aluisio

Excuse-me for the question, but where have you heard it?

I have no idea, except I am a long time follower of LVA and, of course, here. I assumed that was an estimate of the variable costs only, maybe.

Quote: FleaStiff

Its probably the same way with towels and robes and soap wrappers ... a room is cheap.

Very important point. In most hotels a single slot machine brings in as much revenue as a hotel room.

However, the business in Nevada is very mature. Almost every resort is unprofitable if they are losing money on their hotel today. It's not like PA where a slot machine generated $300 a day before taxes, and $140 a day after taxes, and you don't have to sell cheap rooms or subsidize food costs.

There are 190K slot machines in Nevada. You can no longer open a joint, sell cheap burgers, and install a couple of slot machines and find yourself on easy street.

Do the hotels pay "room tax" to the state/county on rooms that are comped?