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Harrah's


  Harrah's
a good bet
by Barry Silverstein
December 10, 2009

For a company whose fate is inextricably linked with gambling, Harrah’s always plays to win.

Despite massive debt and falling income from gaming (revenues for the third quarter of this year dropped nearly 14 percent compared to the third quarter of 2008), Harrah’s has not slowed its expansion plans. At the end of November 2009, in fact, reports surfaced that Harrah’s panned to take over the Planet Hollywood resort in Las Vegas. This move would give Harrah’s control of every property on the east side of the Las Vegas strip.

 
 

Vegas is Harrah’s primary playground, of course; the company owns Harrah’s, Caesars, and Horseshoe properties there. Each of these names is a recognized brand in its own right.

But the city of Las Vegas, recently hit hard by the economy, is just part of Harrah’s grand plan. The company operates more than 50 casinos in six countries, accompanied by close to 40,000 hotel rooms and suites, and supported by over 85,000 employees. Harrah’s Entertainment reports it is either #1 or #2 in market share in virtually every one of its major markets in the U.S. It is the leader in Atlantic City, Northern Nevada, Louisiana/Mississippi, Illinois/Indiana, and Iowa/Missouri. In fact, these regional markets are currently outperforming Harrah’s Las Vegas properties.

Harrah’s also owns the rights to the World Series of Poker, a television money-maker. In October, the firm added Peter Murphy, a development executive formerly with Disney. One of Murphy’s new responsibilities is to help Harrah’s with international expansion.

Bill Harrah opened his first bingo parlor in Reno, Nevada in 1937. By the ‘50s, Harrah’s was a fixture in Reno and Lake Tahoe. In 1980, Holiday Inns acquired Harrah’s, but the business, along with a number of hotel brands, was spun off ten years later. It wasn’t until 1995, however, that Harrah’s Entertainment was launched as a separate entity.

Relationship marketers would likely agree that the modern-day Harrah’s brand emerged in 1998, when Gary Loveman joined the company as Chief Operating Officer. (He is now CEO.) Loveman, a former associate professor at the Harvard Business School, is widely credited with developing and implementing “Total Rewards” in 2000, an award-winning loyalty program that brought sophisticated relationship marketing techniques to the gaming industry.

In fact, relationship marketing is very much at the core of Harrah’s business strategy. According to Harrah’s Entertainment, Total Rewards is the “engine” that helps to “generate same store gaming revenue growth and cross-market play.” The company’s advanced systems “allow management to monitor the play of all of the program participants and focus marketing spend on its highest return uses.”

“Total Gold,” the program’s predecessor, was a frequent traveler-style rewards program, but Total Rewards is a loyalty program on steroids. Customers are assigned to tiers based on their play, with progressively greater levels of perks and comps awarded at the higher tiers. Customers accumulate credits to “comp” any service, from a hotel room to a round of golf. Today, Total Rewards boasts over 40 million members.

As the Total Rewards program matured, the original three tiers (Gold, Platinum and Diamond) were expanded to include a fourth tier, “Seven Stars,” and eventually the “Chairman’s Club,” an elite group of a handful of Harrah’s very best customers.

Interestingly, the first member of the Chairman’s Club, Terry Watanabe, is facing felony charges for not paying almost $15 million in gambling debts. Watanabe, former owner of Oriental Trading Co., brought suit against Harrah’s in November 2009, accusing the company of “breach of contract, conspiracy and negligence” in contributing to his betting hundreds of millions of dollars in 2007 at Harrah’s casinos.

If there is any vulnerability to the Harrah’s brand, it is in the area of compulsive gambling – or as Harrah’s prefers to call it, “responsible gaming.” Obviously, Harrah’s holds a stake in this area. A decade ago, the company established the casino entertainment industry’s first responsible gaming initiative. Harrah’s helps fund a national helpline for problem gambling and runs “Operation Bet Smart,” a program that includes literature distribution, signage, and employee training. “Project 21” is Harrah’s effort to prevent underage gambling.

Harrah’s makes aggressive use of public relations to combat any negative association with gambling. The Harrah’s Foundation, for example, distributed over $9 million to non-profit organizations in the United States and internationally in 2008. H.E.R.O. (Harrah’s Entertainment Reaching Out) is an employee-based volunteer program that encourages employees to help the communities in which they work. Harrah’s CodeGreen is a comprehensive approach to environmental issues, focusing on energy, waste, water, and carbon emissions.

It’s a safe bet that Harrah’s will continue to innovate in the casino entertainment business.

 
     
  

Barry Silverstein has been a frequent brandchannel contributor since 2007. He has thirty years of advertising and marketing experience and is currently a freelance writer and marketing consultant. He founded and ran his own direct marketing agency and held executive positions with Epsilon, a leading database marketing firm and Arnold, a major ad agency. Silverstein is the author of three marketing books, including the McGraw-Hill book, The Breakaway Brand, which he co-authored with Arnold CEO Fran Kelly.

  
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Harrah's - a good bet
 
 I worked for Harrah's Reno in the 1980's. It was during this time that Las Vegas was really starting to boom. Harrah's had a unique but focused strategy even back then. Definitely playing to win. 
Douglas White, Director, Prosperity Research - December 13, 2009
 
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