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Reno hotels hustle for guests

ROB SABO
Northern Nevada Business Weekly
Published Caption: Cathleen Allison/Nevada Appeal
NEVADA APPEAL | NEVADA APPEAL

A room-and-comp package rolled out a few days ago by Grand Sierra Resort in Reno serves as an indicator of the lengths some hotel properties in the region are willing to go to draw business during historically slow early-winter months.

Through March, guests at the GSR can book a room for $39, get a second night free, and get a $20 food comp, as well as $10 comps in the hotel’s health club, arcade and bowling alley. And these aren’t just mid-week room nights -10 weekends are available in the promotion.

The Grand Sierra announced the promotion using traditional media outlets and social media sites Twitter and Facebook.

Ellen Oppenheim, president and chief executive officer of the Reno-Sparks Convention and Visitors Authority, says Reno hotels aren’t alone in their bid to drive business through price cuts.

Average daily rates, which had risen steadily in Reno from early 2003 through the start of the recession in late 2008, dipped to an average of $76.07 in the first nine months of 2009, a decline of 6.2 percent from year-earlier figures, the RSCVA reports.

“It’s indicative of what every city has seen over the past year based on the economy and reduced demand,” Oppenheim says. “Many places have been using price reductions as a hook and an incentive to encourage more travel. Full-service properties have the benefit of gaming and entertainment and have a range of arenas from which they can earn revenue; the key is to get them to come.”

Executives at other hotel-casinos have mixed feelings about the Grand Sierra promotion – which amounts to $20 room nights. Rick Murdock, vice president of casino marketing for the Eldorado Hotel and Casino, says there isn’t much room for error with Reno’s already-low room rates. The Eldorado offers a three-night stay for $89 with up to $75 in dining and entertainment extras.

But Bill Hughes, director of marketing for the Peppermill Resort Casino, says room rates that have hit the floor actually weaken the strength of the regional brand. Heavy discounts, he says, can negatively impact the entire marketplace.

“We do promotional things all the time and offer a variety of packages for a variety of reasons, but we are careful to make sure we have something that still makes good business sense, is reasonable and doesn’t end up undercutting the market,” Hughes says.

“It devalues the brand – people think why should I go up to Reno? It would be no different than going to a marketplace you were unfamiliar with and finding a place that sells rooms for $29 to $39. It sounds like it’s too good of a deal, and the quality of the product is not that good. They think something must be missing.”

Murdock says that although low-priced room rates may slightly water down the strength of the regional brand, low-rate business is better than no business.

Reno’s best bet, he says, lies in increasing its lineup of special events, locking in large conventions such as the Safari Club International and U.S. Bowling Congress, and adding big-name concerts to venues like Downtown Events Center to strengthen the brand, increase tourism, and allow casino operators to raise room rates.

“Reno has to be more creative,” he says. “Gaming is everywhere now; our job is to create appeal in the destination where there is always something fun going on. We need to give people a reason to come.”

Boosting tourism by luring guests to the area with hot room deals is one avenue to pursue – similar deals can even be found at premier properties in Las Vegas.

It makes sense to reach out to recession-weary Californians, Murdock says, with easily affordable room nights and comps that could boost regional revenues through increased consumer spending.

“This recession is hurting California, and if California is hurting, it is hurting us,” he says. “Our biggest market is Northern California, no doubt about it. Properties have to provide offers like this; people are trying to get the most bang for their buck. Price discounts, giveaways, and added value are everything.

RSVCA’s Oppenheim agrees that cash-strapped consumers seek deals in order to consider travel outside of their home markets.

“There are fewer travelers out there, and they are generally taking shorter trips and staying closer to home,” she says. “And they are looking for great value.”

Hughes cautions that casino promotions may not have the desired effect due to widespread availability of legal gambling in California.

“There is an assumption that by giving rooms away you will get supplemental gambling with it, and I’m not sure if that is the case anymore. Gaming is not a unique experience,” he says. “Reno is a great value, and you can promote Reno as a great destination and quality product with great value without completely discounting its value.”