Las Vegas Strip parking fees not hurting visitation, says Caesars CEO
Caesars Entertainment Corp. CEO Mark Frissora dismissed the notion Thursday that parking fees are keeping visitors away from the Strip.
During a Bank of America investor conference dedicated to the gaming and lodging industries in New York City, Frissora said the company looked into whether parking fees were “over the top” and offered free parking for 30 days at The LINQ Hotel to test customer reaction.
“There was absolutely zero change. There is no impact. We just lost money, so we stopped the test,” he said. Frissora said customer surveys during and after the trial did not show “anything.”
Investors and Wall Street analysts have become more concerned that rising resort and parking fees are causing some to shun the mega resorts on Las Vegas Boulevard.
The number of visitors to Las Vegas this year has declined 1.2 percent through July, according to the Las Vegas Convention and Visitors Authority. Although part of that drop is attributed to fallout from the worst mass shooting in modern U.S. history, some like Credit Suisse believe rising fees for parking and other amenities may have also played a role.
Caesars started charging for parking last year, following in the steps of MGM Resorts International, the largest Strip operator by properties. Caesars then raised its parking fees in March after hiking resort fees at some of its Strip hotels in February.
Frissora said guests may be more “sensitive” to fees, but customer feedback does not indicate that resort and parking fees are turning people away from their properties.
“We haven’t seen any increase in our customer survey data that would suggest the fee structures are causing a problem,” he told investors, adding the company looked at data going back three years.
Wynn Las Vegas and Encore changed their parking policy in July, allowing anyone that spends more than $50 at its two Las Vegas resorts to park for free. The company said parking fees are ”counter to the personalized service we provide.”
A survey conducted by the Las Vegas Global Economic Alliance earlier this year found nearly 30 percent of Las Vegas residents said they avoid using any services from a Strip casino that charges for parking. The online survey of 500 people was conducted in February and March and has a margin of error of nearly 4 percentage points.
What test?
Some Las Vegas residents and visitors took to social media to criticize Caesars’ test, saying the company did not promote it widely enough.
Caesars spokesperson Jennifer Forkish said The LINQ Hotel offered the complimentary parking in August. The offer was posted on Caesars’ website as well as at online travel agency websites, such as Expedia.
“Unless they promoted it, anyone discovering free parking would just assume they got lucky. It’s a test designed to fail and confirm what they already wanted to be true,” Michael Bangs, a Seattle resident, said in a tweet.
Bangs, when contacted by the Review-Journal, said he used to visit Las Vegas four to five times a year and now comes at most once a year. He said the fees have “greatly reduced the proposition of Vegas as a value destination.”
Chris Grove, managing director of sports and emerging verticals for Eilers & Krejcik Gaming, a California-based research firm, said Caesars should have carried out the test over a longer period of time in order to better gauge any impact.
“I think that charges like parking fees have both short-term and long-term impacts on customer behavior. I’m not sure that you can say for certain that parking fees aren’t hurting your bottom line after a 30-day test at one property,” he said.
More Discounts
Frissora and CFO Eric Hession said September bookings in Las Vegas are “not picking up to our expectations,” but consoled investors by saying that October would be “very strong.”
About 301,000 conventiongoers are expected to visit Las Vegas in October up from 250,000 in the same month last year, Frissora said.
A fight between Connor McGregor and Khabib Nurmagomedov on Oct. 6 should also help drive additional visitations to Las Vegas, he said.
Caesars’ share price tumbled as much as 25 percent Aug. 1, when executives announced that July had been weaker than expected and August would also come in below expectations. They cited fewer conventions and events, such as boxing fights, as the cause.
To avoid weak visitation in November and December, traditionally slower periods, Caesars is mailing out more incentives to its loyalty members to fill rooms, the executives said.
“We think it’s better to hedge at this point and build that base early on so we are not caught late like we were in July,” said Hession.
Improving slots, technology
Frissora and Hession told investors that their efforts to reorganize gaming floors and add new slot offerings has paid off. Customers are spending more money at slots, they said.
While they did not say which games are driving the incremental volume, the executives said skill-based games are “doing well.”
The executives also said software upgrades will enable the company next year to send guests real-time offerings through Caesars Total Rewards app. The company expects that to improve marketing efforts and drive additional revenue.
Shares of Caesars closed up 1o cents, or 1 percent, to $10.45.
Contact Todd Prince at 702-383-0386 or tprince@reviewjournal.com. Follow @toddprincetv on Twitter.
Caesars Entertainment Corp’s Strip Parking Rates
Self-parking rates at Flamingo, Harrah’s, The LINQ Hotel, The Cromwell, Bally’s and Paris Las Vegas is $9 for one to four hours and $12 for more than four hours. Caesars Palace charges $12 for one to four hours and $15 for more than four hours.
Parking at Planet Hollywood is free. Parking at any of the properties under an hour is also remain free. Parking is also free for Caesars’ Total Rewards Members with Platinum, Diamond or Seven Star level.
