MGM Grand Casino: safety innovation and expansion strategy after the 1980 fire

¶ … MGM Grand Casino opened in 1993 after ground was broken in late 1991 on the former site of the Marina Hotel and Tropicana Country Club, two properties MGM CEO and Chainman of the Board Kirk Kerkorian purchased in the late 1980s (MGM Resorts International, 2013). One of the primary motivations for MGM Corporation to create an entirely new hotel in Las Vegas was to rebrand and redefine the customer experience, including redefining safety from literally the ground up with the new properties (Sprecher, Pertl, 1988). The MGM Grand fire that occurred on November 21, 1980 was the worst disaster in the history of Nevada, the third worst in the history of the Untied States and left 85 people dead when it was over, primarily from smoke inhalation (Sprecher, Pertl, 1988). The present site of Bally's on the Las Vegas Strip is where the MGM Grand was originally located when the fire occurred. CEO and Chairman of the Board Kirk Kerkorian chose to completely start over with one of the country's largest casinos and report complexes ever built, all beyond the safety standards that the state of Nevada quickly passed after the MGM Grand Fire (Sprecher, Pertl, 1988).

The present MGM Grand Casino today is located on 6.6 acres, has 6,852 rooms and a total gaming space of 171,500 square feet (MGM Resorts International, 2013). There are 2,500 gaming machines in the property and 139 poker and table games (MGM Resorts International, 2013). MGM Corporation specifically stated they wanted to create a state-of-the-art casino experience with the MGM Grand Casino. To accomplish this the company created five outdoor pools, rivers and waterfalls, a total of 19 restaurants and a food court and a small shopping center located across the lower floors. The Lion Habitat, Broadway-style show Tabu, world-class nightclub Studio54 and the CSI: The Experience are all designed to capitalize on the legacy of entertainment that the MGM Corporation has from decades of operating one of the most successful entertainment franchises globally (MGM Resorts International, 2013). MGM Grand Resorts refuses to become complacent with their casino strategy as well, financing expansions and continued development in 1996, 2002, 2005 and 2012 to stay ahead of competitors The Venetian, Mandalay Bay and Paris hotels (MGM Resorts International, 2013).

History of MGM Grand

Ground was first broken in October, 1990 and the grand opening was on December 18, 1993. Since the opening of the MGM Grand Casino there have been three major expansion phases in 1996, 2002 and 2012. The following table provides an analysis of each of the significant events in the casino's history, culminating with the grand renovation that was completed in 2012. The initial phases of these significant events where designed to move away from The Emerald City and Oz themes to a more Art Deco and classical Hollywood decor (MGM Resorts International, 2013). MGM Corporation wanted to also retrofit and refurbish the Marina Hotel (which had just been rebranded to MGM Grand with little external modification) to also reflect their shift in strategy away form the Wizard of Oz to a more customer-experience driven approach to marketing the casino and hotel (Reimann, 1993). The following table provides an analysis of the major phases of the casino's history over time.

Comparison of MGM Grand Casino Phases and Refurbishments

Phase

Additions or Changes to Resort

First

1996

Extensive refurbishments to reposition the MGM Grand Casino away from The Emerald City and Oz Casino to a more classical entertainment venue concept. Included the demolishing of the Emerald City Gift Shop and the development of subterranean shopping center; also included the redesign of the front entrance.

Extensive remodeling and minimal increases in square footage -- repositioning away from The Emerald City and Oz Themes to classic Hollywood.

Second

2002

Continued renovations to Art Deco Style which provided to be very popular with a more mature, higher-income audience were completed (MGM Resorts International, 2013).

MGM also initiated "City of Entertainment" market direction, which was highly successful as it supported the company's new direction of "Maximum Vegas."

This was a very significant shift in strategy for MGM Grand Casino as they moved away from fantasy themes to a solid customer experience-based strategy.

During this time period, MGM Grand was also the first to move to having a check-in at the airport to further streamline the customer experience. It was exceptionally successful in generating high levels of customer satisfaction and is in operating today (MGM Resorts International, 2013).

Third

2005

"West Wing" Renovation of the original Marina Hotel; included the redesign of 5,000 room and inclusion of ten restaurants (MGM Resorts International, 2013).

Fourth

2012

State-of-the-art makeover to bring the hotel into the 21st century, this renovation added the following to the MGM Grand Casino:

Lion Habitat is gone and a 75K square foot restaurant replaced it

Mansion Lodging

Skylofts improved and expanded; state-of-the-art penthouses

Studio54 and Crazy Horse Theatre have been removed to make room for more timely entertainment venues

Extensive suite makeovers with flat screen TVs, terraces overlooking the strip;

Strong elegance theme with 270 degree views of the strip

New website: http://thegrandrenovation.com/

MGM Grand casino has a 12% market share and is the second-largest casino in the U.S.in revenues. Caesar's Entertainment Corporation is the market share leader with 17.2%, with Sands trailing significantly with 4.2%, Wynn Resorts with 2.8% and over two dozen smaller competitors on a regional basis (MGM Resorts International, 2013). Each of these competitors has chosen a different approach to protecting their market share and growing it against each other. Caesar's is concentrating on an immersive experience that includes entertainment, a strategy that MGM Grand is imitating today (MGM Resorts International, 2013). Wynn Resorts is concentrating on high net worth individuals and is seeking to create a more resort-like experience where gambling is for entertainment, not necessary for competitiveness or for the size of the winnings possible. For Sands, the focus is on the pure economics of gambling from the tourists' perspective, which is the promise of big jackpots and a very high energy, flashy experience (MGM Resorts International, 2013)

Operations of the MGM Grand Casino

Casino operations are increasingly being affected by the pervasive adoption of the Internet as a reporting platform, and the continual shift of roles to more analytics-driven ones over standard, rote work in operations. The following is the organizational chart for the Casino Operations department. This operations structure allows for MGM Grand casino to serve customers while also ensuring the stability of overall operations for the long-term:

The use of Wi-Fi is pervasive throughout the casino, which makes it possible for the slots manager and slots pit bosses to stay in constant contact with each other. The same is true of the table games manager. The use of analytics for streamlining casino operations security is also becoming more commonplace.

MGM Grand Marketing

MGM Grand casino has one of the most intensive marketing programs in the industry with entirely revamped websites, intensive use of social media, and the use of celebrity spokespersons to further bring credibility and status to their brand (MGM Resorts International, 2013). The loyalty program is among the most generous in Las Vegas with immediate hotel discounts given just for signing up, and the accumulation of gambling points that never expire. MGM Corporation reports that their churn rate is below 20%, which is exceptional given the highly competitive nature of their business (MGM Resorts International, 2013). MGM Grand marketing is also concentrated on the highly affluent segment of 25- to 40-year-old singles or dual-income no kids market segments with incomes over $100K a year (MGM Resorts International, 2013). The renovation recently completed is squarely aimed at this market segment.

Summary

MGM Grand casino needs to be considered a member of the hospitality industry as this property has transformed itself into a resort, as evidenced by the use of 6.6 acres for entertainment over just gambling. From a sociological standpoint the MGM Grand casino is also more of a resort as it today has a state-of-the-art conference center that is often running at 60% booking rates in a given month (MGM Resorts International, 2013). This all leads to the recognition of the casino as a hospitality destination vs. being a casino. There is also the successful transition the company has made with four different remodels and gradual shift away from themed entertainment to a commitment to delivering an exceptional customer experience.