The Dirty Dozen. Why Corbyn’s Labour (worryingly) might win.

I wrote Prime Minister Corbyn, A Strategic Masterclass  18 months ago before Brexit, before May before Trump … and it is, in my mind highly prescient.

 

All my UK friends look at the polls and see the Tories are nailed on to win the forthcoming election. Here’s my 12 supplementary thoughts.

1. Don’t be so sure of the polls, as being in the USA for the past year Polls are national. Votes are local and not distributed equally.
2. Miliband was a disaster, electorally, motivating neither the left or right of the Labour Party. The Left IS highly motivated and alienated non-voters MAY return to Labour. Where will the working class UKIP vote go?
3. Theresa May is not David Cameron, who was a great communicator and an electoral asset. May, for now, is neither and there is little evidence that she will flip to being a charismatic campaigner for the media age.
4. There are very good Labour MPs (that want to part of a Labour Party, just not ‘this’ Labour Party) that will command a personal vote and hold key constituencies. There will not be a Labour collapse.
5. There are 29 Tories under Criminal Investigation- ‘All politics is local.’ said Tip O’Neill.
6. The Liberal Democrats will not face the same wipeout – and in my view will take votes from pro-European Tories as well as metropolitan Labour. There will be an Anti-Tory tactical vote in many areas.
7. The SNP may form a coalition with Labour, making a majority easier, post election.
9. In 1983 there was an SDP taking votes from the centre Left. These centre left voters have 2 choices. Hold your nose and vote Tory or hold your nose and vote Labour. How will this split on election day?
10. Six weeks is a long time in politics. Who knows what the USA/China/ Korea/Iran/Syria/France foreign policies will look like when the UK votes this summer.
11. Brexit is the biggest public event since WW2. Churchill is the greatest ever Briton. Churchill lost 1945 to a “sheep in sheep’s clothing” promising a radical left agenda.
12. Trump had 1 national newspaper endorsement and was a figure of media ridicule. He is The President of the USA.
It ain’t over, ’till it’s over.

Trump 3:16 says, I Just Whipped Your Ass

If you get the headline, there is no introduction needed, if you don’t, let me explain.

Back in March, deep in Republican Primary season, I gave a message to all those that read my column; Donald Trump is following WWE Wrestler “Stone Cold” Steve Austin’s strategy.

https://oliverlovat.wordpress.com/2016/03/03/donald-trump-the-smackdown-strategy/

Quoting Wikipedia, Austin was “a disrespectful, beer-drinking antihero who routinely defied the establishment and his boss, company chairman Vince McMahon; this persona of Austin’s became the “poster boy” of the Attitude Era, a boom period in WWF business in the late 1990s and early 2000s and was one of the biggest factors in helping the WWF win the ratings war against their competition, World Championship Wrestling (WCW). Several prominent industry figures, including McMahon, have since declared Austin to be the biggest star in WWF/E history, while stressing that he surpassed the popularity of Hulk Hogan.”

He was neither a gifted wrestler or a great communicator, but he was one of the most supported personas in wrestling, despite being a heel, or “bad guy”. Confounding the management of the time, he would regularly get the crowd’s support against the face or “good guy” and the authority to which they represent.

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So how does this lead to Trump?

It transpires that Trump was emulating Austin’s strategy two-fold.

  1. Austin’s most vocal and passionate supporters were the WWE’s core fans in America’s heartlands; gain white, working class, typically non-college educated voters, and judging by the exit polls of last week he achieved this:
  • 58% of white voted Trump
  • 53% of over 45s voted Trump
  • 51% of High School educated and 52% of some (but not college) education voted Trump
  • 62% of Small city or rural Voted Trump
  • 58% Protestant or other Christian
  • 61% of Veterans
  1. Austin was neither a heel or a face, but his “own guy”.

Donald Trump did not win the election as a Republican. He did not run in the Republican Primaries as a Republican, he ran as an Anti-Republican, and with the Republican brand, he ran as an anti-Establishment candidate. The voters are his, not the party’s.

Like Steve Austin, he (Trump) has ridiculed his opponents in the crudest and most obvious ways to make them become irrelevant and small compared to him. With Cruz and Rubio, expect the same standard stereotyping as seen previously, and against Hillary Clinton a new wave of sexism and misogyny not seen in public debate for decades. 

And like Steve Austin, he has changed the Republican Party through insurgency; the traditional rules of politics do not apply. The voters are his and not the Party’s.

I can’t believe that nobody from the Democrats watched the WWE in the 1990s. There was a pattern that when “the Establishment” or the management objected to his behaviour, Austin’s support grew. When the WWE uncovered a talent, branded it the “next big thing” the fans resisted being told who to support.

The more Hilary was endorsed, especially by the shiny pop stars of the moment, the greater the antipathy towards her grew. This is a real insight into the voter psyche, the same as wrestling.

So well done, The Donald, you knocked out all the opponents and you have won the King of the Ring.

 What Happens Next?

The campaign was run like the build-up to a Wrestlemania, but now the main event is over and the belt passed, The Donald’s face said it all, he is now the President of the United States of America. The Commander in Chief of the world’s most powerful army. This is not a game anymore. This is Bigly (or Big League, as I am told is the full meaning).

Since I started this piece, there have been articles posted suggesting that Linda McMahon, the actual establishment figure that Austin rallied against is to join Trump’s Cabinet!

The one problem Steve Austin had was he found it difficult to appeal outside his core (but large) white USA audience, so while he was an undoubted megastar in WWE terms, he lacked the cultural crossover that a Hulk Hogan, Undertaker or The Rock managed to achieve. And this may be his ultimate problem.

Trump has successfully created this position where he challenges the establishment. Now he is the establishment, and it is a careful balance to maintain the level of managing anger against the other and making change.

There was chatter in the media this week of asking who could beat Donald Trump? Someone that is multi-ethnic, a good speaker, popular, handsome, thoughtful, politically engaged and articulate?

Who did the media suggest?  Dwayne “The Rock” Johnson, the same guy who ended the reign of Steve Austin a decade ago. I kid you not.

Johnson said, “I wouldn’t rule it out. It would be a great opportunity to help people, so it’s possible. This past election shows that anything can happen.”

So, we conclude 2016 with the knowledge that, politics in the second decade of the 21st century is wrestling without the ring. There is a curious scent in the air.. who knows what’s cooking…

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OL  NOV 16

The Party’s Over. My Thoughts On The Death of The Labour Party.

Some background:

As a student 20 years ago at university we had a small, but vocal radical Islamist minority, separate from the Islamic Society and organised behind name of Hizb-ut Tahrir, a group which rallied at lunchtime outside the Students Union, waving flags, chanting slogans such as as “Death to Zionists and Gays”, while the Union generously paid for their participation in advancing student life!

As an activist, I spent time in the Union of Jewish Students office, researching and compiling a dossier about radical Islamist groups which we felt to be a danger to campus life and the community in general. The report was presented the then Home Secretary, Michael Howard, calling for the outlawing of Hizbu-ut and a similar splinter group, Al-Muhajiroun. This was dismissed. In 1997, NUS passed a motion banning these groups from campus and the groups were eventually made illegal in 2005 after the 7/7 bombings in London. The groups may be gone, but the ideology hasn’t.

Also as a student I was elected to the NUS NEC where along with others, I co-convened the NUS anti-racism campaign. As a sabbatical officer in 1998, I worked with the UJS to research hard left groups and try and understand their thinking, their ideologies and their strategies.


tony-cliffTony Cliff


I found the hard-left, as a whole, slightly charming on the surface, but deeper down quite threatening. It was a collection of cranks, social misfits and crusty relics living in a parallel universe, where conspiracy theories were reinforced by collective groupthink. Splinter groups were established on the basis of what some people thought Trotsky may have believed in the 1920s, verses those who believed Trotsky’s writings of the 1930s. If you challenged or dissented with the absolute certainty of the leadership you were an enemy and faced purging.

What was fascinating was a near swivel-eyed obsession with Israel and Palestine. Partly due to some of the dominant founders of the groups, such as Tony Cliff, (born Yigael Gluckstein) who was the founder and leader of the Socialist Workers Party, and Michael Kidron, Cliff’s brother in law, who were both active Zionists before rejecting that ideology. The Zionist occupation of Palestine was debated at every opportunity. Most argued that a Jewish State should not be allowed to exist at all, while others saw it as necessary response to Nazism and a limited state alongside a Palestine.

One of the main differences between the hard-left groups was how to achieve the revolution.

For some it was violent overthrow of the Government and the institutions of power, while others took the entryist approach through infiltration. Their endless and facile debates on class struggle and global realignment were totally pointless as their strength to achieve these goals was limited.

I have theories why the hard-left grew again in the UK, which include a confluence of tuition fees, the Iraq war, perceived inequality and of course the financial crisis; after every major global shock, there is a delayed social response. Across the globe there is the polarising of politics and the UK is no exception, but there were still so few Trots/Marxists/Leninists/Maoists to really forge that revolution, despite controlling several Trade Unions via the entryist route.


RSDr Richard Stone OBE


Back in London in 2001, I worked at The Stone Ashdown Trust for Dr Richard Stone, a true gentleman with great morals and a brave social justice campaigner against racism. He was central to the Stephen Lawrence Inquiry coining the concept of institutional racism and an advisor to London Mayor Ken Livingstone (For those that do not recall, Ken ran as an Independent to the office of Mayor against the Labour candidate). On occasion I would both accompany or replace Richard at meetings and committees with the likes of Ken and Diane Abbot. There is nobody in the UK who has done more to advance Jewish-Muslim relations than Richard Stone, and I am proud to have been part of his work.

I sat as co-chair of Alif-Aleph a Jewish Muslim dialogue group which we set up, holding dozens of events and meeting many people from the various Muslim communities. I served on the Executive of the Jewish Labour Movement and the Zionist Federation of the UK.

I think I hold pretty good credentials as an anti-racist, a Zionist and as a member of the Labour Party, and never found my views to be in conflict.


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The Iraq War and Gaza conflicts were the catalyst to bring together the anti-west hard left, and the Muslim communities of the UK, finding common enemy in Israel, the establishment forces of Blair and Brown’s Labour Party and the Conservative Party that supported Israeli actions against Hamas. Although there is very little that unites these two disparate groups, in fact that with any normal scrutiny the two are ideologically poles apart, the issue of Israel/Palestine is only focal point – and such is the hatred of Israel and Zionism it blinds the hard left to other aspects of radical Islamism.

It is not unique for two diametrically opposed groups to align for electoral or political interest. In coalition Governments across the world, ideologically opposed minority parties work together, such as in Israel, where secular and religious parties sit around the same cabinet. On a grander level, let us not forget that Communist Stalin and Fascist Hitler had a pact in the 1930s prior to the war.

Having had many conversations with British Muslims about Israel, I can confidently state that there are not many that one would define as pro-Zionist. I understand this. There are many Zionists that view the Arab world as their enemy. Some are ambivalent to the cause, but most Muslims believe the conditions and situation of the Palestinians is the fault of the Zionists, while many Zionists also accept that the Palestinians’ plight is terrible, but is due to a failure of their own leadership and political expedience of other Arab countries to isolate Israel diplomatically.

Irrespective, finding a common enemy in Zionists, the hard left turned a blind eye to the overt racism of radical Islamism and even some of the more moderate voices (which by traditional definitions were outside the established conventions of acceptability) in order to form electoral partnerships. Initially seen in London by the likes of Respect led by George Galloway, Ken Livingstone in London and Lutfur Rahman in Tower Hamlets, but also in many of the Muslim dominated cities in the north. With evident electoral successes, the convergence between the Muslim communities and the hard left is growing.


ed


As I have written previously, in my view Ed Miliband is the worst leader in Labour’s history. By appointing known members of Livingstone’s team to key Labour positions and changing the party rules to actively enable entryism, he reconstituted the Labour Party as a vehicle for the left, and then ran away. The clique of Marxists took their chance. It is a strategic masterclass and the opportunity that many on the hard left had been waiting for and hoping to engineer their whole careers.

One should also note that many institutions throughout the left, from Trades Unions to the Labour Party are now dominated by the small number of people that share this radical Marxist ideology both in membership and in leadership.

I need not dwell on the fact that much of the new membership of the party was once clearly anti-Labour, however it saw fit to elect Jeremy Corbyn as Leader. If Ken Livingstone had been an MP in 2015 it is undoubted that he would now be the Leader of the Labour Party, as would Fidel Castro, Yassir Arafat or Gamal Nasser. Labour’s most successful leaders, Attlee, Wilson and Blair would not get a hearing.


There are several statements that must be addressed in the context of last week’s events:
  1. Zionism is the the right of self-determination for the Jewish people and a belief in the right of existence of the State of Israel.
  2. Much of the hard left, for reasons outlined above do not accept this, so while as individuals they do not believe themselves to be anti-Semites, they singularly deny the Jewish people rights that other nations are afforded.
  3. The critique of “criticising the policies Israeli Government” is a fallacy; the hard left denies  Israel’s right to exist.
  4. Many of the new members to the Labour Party are anti-Zionist, some are clear anti-Semites.
  5. While most British Muslims detest and fundamentally object to the platform as advocated by radical Islamists, there is still significant support and tolerance of these radical groups. Sometimes the anti-Semitic messages filter through.
  6. The realpolitick of embracing many previously anti-Labour members into the Party, many with values that are in conflict with the traditional Party members, means that there is an ideological clash that cannot be ignored.

corbyn_palestine


If Corbyn’s Labour Party cannot accept the statements above, they must, or they do not understand the problem.

Calls for “Party Unity” led by Corbyn, Abbot and the Trade Union entryists is as absurd and illegitimate as saying Hitler, the man behind the tens of millions of deaths, creating a pan-national infrastructure to gas and burn the largest number of people in the most efficient way possible, was a believer in Jewish self-determination in Israel, and justifying that position as the view of the Israeli Prime Minister. Who would be so pernicious and wildly illogical?

Reading blogs and tweets I am left in despair. The same moronic and malevolent conspiracy theories that were the preserve of the extremists on campus now appear to be mainstream discourse. The extremists have become the establishment.

I have no idea if members of the party are seeking to replace Jeremy Corbyn, but they should want to if they want the Labour Party of the last 100 years to survive as it was. However as it stands, there cannot be a coup within the Labour Party- that time has passed.

The Party is over. It is morally bankrupt, and if not for the support of the Trade Unions, would be financially bankrupt.

Today’s Labour Party is past the point of relevance, the brand alone is all that keeps it together. With the alliance of the hard left and the new extremist party membership talking to itself, all moderates can hope for is that it will become as irrelevant and as divided as the SWP and Marxists were a generation earlier. If it continues, the effect will be an expansion of extremism, conspiracy theories and anti-semitism as we have seen since Corbyn’s election last year.

No sensible person can want Labour to win power at the moment, yet moderates are powerless to make change. If anyone believes that the Labour Party is the best way to affect positive change in society, they are misguided.

It is time for anyone who cares about the future of Britain to let the Labour Party die – and hope that it does so, quickly.

 

Donald Trump: The Smackdown Strategy.

It has been fascinating watching the recent Presidential selection cycle in the USA.

On arrival, I started asking people who they were looking for as a Presidential candidate – and a surprising number of people I spoke to said, “anyone but Hillary” and Donald Trump was the person they would like to vote for. Several are serious, successful, thoughtful people whom I respect the opinions of – so it isn’t just the disenfranchised.

As a European coming to America, I was genuinely ambivalent about Trump. His candidature did not seem serious, despite the number of people who felt he was a legitimate political figure. Like many, I saw him as a celebrity critique insurgent, like Russell Brand in the last UK election; a man with support, who lacked credibility other than to inspire the disaffected and marginalised in society. His campaign made no sense. “I’m richer than these guys so I am right and they are wrong. These guys are hopeless, ugly and stupid. I will beat them to a pulp.” His policies were, “I am a tough guy and I will stop the bad guys who are foreigners, weak liberal elites, the establishment who are keeping “us” down.”

I didn’t get it.

Surely Presidential candidates are the peak of American society, experienced leaders with decades of public service serving as VP like Nixon (and Senator of California) and George H W Bush (who also headed the CIA). We want to elect the best among us, like Truman and Wilson, educated men with a firm moral compass needed  to make the hardest and most difficult decisions. Or we want the most congenial leaders, like Reagan, Roosevelt and Clinton who use charm and personality to bring people together. We want military heroes like Kennedy and Eisenhower, (among many) both of whom had demonstrated leadership in the battlefield. Even when we need the dirty stuff done, Presidents like LBJ have a firm grasp of the real world having been a teacher and public servant.

Donald Trump is none of these and unlike any other candidate.

As a student of the post-war American Presidency, I looked back at similar campaigns and the closest candidate is Barry Goldwater in the 1964 campaign. Goldwater was a southern businessman and politician, and perhaps the godfather of the southern conservative movement, of which Ted Cruz is now the flag bearer of. His policies are not so similar to Trump, but his positions were just as polarising. His bullying criticism of the Republican elites and hounding of Nelson Rockefeller, the grandest of grandees, has some similarities, but Trump is no Goldwater.

Goldwater, for all his opinions was a committed public servant, a thinker and had great rectitude. And, as we know, Goldwater lost the 1964 election by a landslide against LBJ.

And then it hit me today. Donald Trump is not following a traditional political strategy at all, he is NOT Goldwater, or anyone else. His campaign is a wrestling narrative and November the 8th is Wrestlemania. He is playing the playbook of “Stone Cold” Steve Austin, a 1990s character from the WWE.

Wrestling as Life

Back in the 1980s and 90s I was a wrestling fan. Each “character” represented a segment of American life.

Hulk Hogan was the bronzed all American super-hero. Roddy Piper and Jim Duggan, the American everyman, Sgt Slaughter the turncoat, Andre the Giant, The Iron Sheikh, Nikoli Volkoff, the foreign bad guys (who became good guys depending on prevailing US Foreign Policy!).

However, something strange happened in the late 1990s. A wrestler, a bad guy, Steve Austin, after winning a match against former “hero” Jake “The Snake” Roberts (below) came up with a persona where he took on the good guys and denigrated their personas.

Because of his character’s “personality”, nobody owned him, he said what he wanted and drank beer after a fight against the rules. The ruder and more obnoxious he became, the more people loved him.

As his popularity grew, the WWE created more “establishment” figures to try and stop him, to the point where the WWE created a long running feud – as part of the storyline –  with the owner of the WWE Vince McMahon. The narrative was that the WWE as a company wanted to stop Austin, but buoyed by his grassroots support, Austin became more and more popular and won the day.

Steve Austin remains one the most iconic wrestlers in history. There were many better technical wrestlers, many more articulate and charismatic speakers, but few who managed to win as much popularity and adulation.

Austin not only earned top billing, but changed the medium of wrestling away from the black and white narrative of good guy-bad guy, but shifted the entire wrestling business to a new phase known as “Attitude.”

After injury, Steve Austin’s appearances became less frequent, but Donald Trump, a long term supporter of WWE started to appear as a guest and latterly as a character, involving himself into storylines, ultimately becoming one of Steve Austin’s victims in the Wrestling ring.

It is clear to me, that Trump has copied Steve Austin’s strategy.

Like Steve Austin, he has ridiculed his opponents in the crudest and most obvious ways to make them become irrelevant and small compared to him. With Cruz and Rubio, expect the same standard stereotyping as seen previously, and against Hillary Clinton a new wave of sexism and misogyny not seen in public debate for decades. 

And like Steve Austin, he has changed the Republican Party through insurgency; the traditional rules of politics do not apply. The voters are his and not the Party’s.

So stop talking about historical precedent or anything else that has gone before. The fight for the Republican Nomination – and indeed the Presidency – has roots in WWE and not historical political strategies.

Opponents better hit first, and hit hard, as taking from Steve Austin’s signature move, it only takes a second before they are hit by the Donald Trump Stunner – and there is no getting up when knocked down.

OL March 2016

 

 

 

Reaching For The Stars..And The Starbucks

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It has been well documented that the sustainable success of Las Vegas over the past 20 years has been due to the rise of non-gaming revenues rather than gaming revenues. Non-gaming revenues account for c.64% of the total. Indeed, even with recent declines, Macau’s gaming revenues are over 6 times those of Las Vegas, but their non-gaming revenue is under 10%.

Developing the non-gaming offering has proved the saviour of Vegas, but this has not been easy or straightforward and the lessons of the operators here are worthy of some detailed examination.

The Starbucks Phenomenon

There are over 30 Starbucks coffee shops on the 4 miles of the Las Vegas strip; the latest, if blogs are to be believed, will be near the front of the Cosmopolitan. If he stood at the front of this unit, Tiger Woods could probably drive a golf ball into 3, and possibly 4 other units serving Seattle’s favourite coffee, pastries and sandwiches.

Starbucks has done well out of Las Vegas and the alignment is obvious; visitors – whether convention customers with limited time or tourists looking to log on to the free wi-fi – want their coffee the way they like it. Starbucks is the ubiquitous brand that helps in low-impact decision-making and is no more than a couple of hundred yards away from heavy population centres in every major city, always ready to meet the customer needs.

However, the roots of Starbucks’s dominance on mass-market Strip customers are not their own and one needs to look back 30 years to see the beginning of the brand story.

RIV 1984

It Started At The Riviera.

Dr David Schwartz of the UNLV Center for Gaming Research calls it the “Burger King Revolution.” In 1984 the then General Manager of the Riviera looked out of his window at the juxtaposition of the offer of a $2.99 buffet at Circus Circus and the line that formed outside the standalone McDonalds unit that had opened on the Strip. He concluded that from the customer’s perspective, the value proposition provided by a branded burger sold at a premium was greater than a subsidised buffet. On this basis, how could the Riviera capture the customers who had walked outside Circus Circus for lunch, and get them to come in to the Riv?

The GM, Jeff Silver, approached Burger King, and against the wishes and instincts of casino executives, gaming commissioners and industry experts, opened a Burger King at the front of the Riviera Hotel. This was the first fast food franchise to open in a Las Vegas casino and within 12 months this was the highest grossing Burger King in the company’s portfolio.

In 2015 White Castle, purveyor of square burgers in a white bread bun, opened their first branch in Las Vegas, but within 24 hours it had closed its doors. Not for violence or construction issues, but with an estimated 4,000 visitors per hour, the unit had simply not anticipated demand and had run out of stock.

 

WHITE-CASTLE-LAS-VEGAS-CLOSES

Food and Beverage

In 2007, the average Las Vegas visitor spent $254.49 on food and beverage, but by 2014, this had increased to $281.88. In a period where expenditures of lodging and gaming budgets had fallen 27.3% and 4.6% respectively, the increase in F&B spend of 10.8% is quite remarkable.

In further analysis between the ‘gaming visitor’ and ‘non-gaming visitor’s’ expenditures, the gaming visitor’s non-gaming expenditure had risen from $139.41 to $147.96, but the non-gaming visitor has risen from $201.15 to $254.60. Quite simply, the non-gaming visitor’s budget is increasing faster.

Breaking this down further, per available room, food sales total $34.24 per day and beverage Sales total $20.82. So where the ADR of the Las Vegas hotel room in 2014 was $116.73, the spend on F&B was $55.06 – slightly over 47% of room rate!

At last count, there were over 700 food and beverage options on the Las Vegas Strip.

Operating models

There are three operating models for food and beverage on the Strip. The first is the fully leased model, where the retailer leases the space from the casino resort (or landlord) and operates independently. Secondly is an incentivised lease, where there is an outsourced model where there are opportunities for shared revenues, so a retailer may have a rent, a turnover provision and a management agreement, and points of revenue are carved out across the operating business. The final model is where the casino operator operates the food and beverage outlet.

Of course there are various advantages and disadvantages to each of these. Steve Wynn makes a point that his businesses have always operated their own food and beverage – and that the non-gaming revenue has historically been higher than their gaming revenue, but that comes with operational risk, higher costs and the inability to bring in brands that customers have resonance with.

On the other hand, other properties have been able to bring in external brands that their customers value and align with the property. The likes of STK at the Cosmopolitan, Gordon Ramsey at Caesars and Yardbird at Venetian have all been great successes, with the resorts gaining increased visitation, revenue and brand equity through alignment, without taking operational risk or making significant expenditure.

For those of us who study strategic marketing in Las Vegas, this is a fascinating area.

Strategic Competitive Advantage

As regular readers will note, my core work is on strategic competitive advantage within casino resorts, for which there are two factors – location and loyalty.

Assuming location is nothing that a management team can change once the asset has been built, the challenge for management is in building customer loyalty.

However, the core product of gaming is not differentiable by price and in any meaningful way by product. Indeed, in the rooms and customer experiences, all the major operators offer similar customer centric experiences.  In the area of functional loyalty, customers are loyal to particular aspects, experiences and brands that they identify with.

As we notice with the Riviera back in 1984, certain customer segments want brands, which reinforce preconceived experiences and allows for an instant alignment for the customer to relate to in the crowded Las Vegas market.

The food and beverage offering is one of the key ways in which operators can differentiate their offering; research suggests that 60% of Las Vegas visitors see the range of dining options as either key or important in influencing their decision of where to stay when in Las Vegas.

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The Dilemma

Caesars’ new Linq hotel has seen a successful relaunch, with increased occupancy and rates that average at over $100 per night. The Linq promenade has been an experiment of bringing brands for the Millennial customer into one place. Some original, like Guy Fieri’s diner and Purple Zebra, but others like Yardhouse, Flour and Barley and, of course, Starbucks have supplemented this range.

With over 40m visitors, Las Vegas is certainly the place to be for entertainment and there is a proven market for global food and restaurant brands ready to advance on the Las Vegas market- not just in the low impact decisions such as fast food and coffee, but the F&B super-brands and celebrity chefs which feature in all the places that the chic set like to frequent. Moreover, it is clear that by bringing in the external brands, this is an easy win for the operators.

For every Burger King and White Castle, Nikki Beach, Bagatelle and the entire SLS, prove that a strong brand does not guarantee instant success, however with alignment, it certainly de-risks the operation.

For me, Las Vegas has flourished because that it is a hub of innovation and uniqueness where the high margin gaming revenue has allowed developer’s imaginations run riot and people to take risks– where else can you dine with Picasso paintings or overlooking a fountain dancing to Sinatra?

Without the creation of these unique and special experiences, Las Vegas will just become another corporate shopping mall, with the best of the rest coming to town to scoop up a bit of the action.

Originality works when you understand your customer, look at Downtown Las Vegas, with Oscar’s at the Plaza and Siegel’s 1941 at the El Cortez, which note their customer’s needs and play to the strengths of the properties in questions.

Since moving to Las Vegas, I have been working with operators to understand their market and customer and help develop appropriate strategies for competitive advantage.

Las Vegas of 2016 is very different from Las Vegas of 1984.

My message to operators is this, by developing a unique brand and experience, you are creating a real strategic advantage for you and your business in this most competitive environments. It is worth the effort. Except in the area of coffee – people just want Starbucks!

Business Lessons Learned From The Reinvention Of Las Vegas

In the past calendar year, the Las Vegas Convention and Visitors Authority (LVCVA) reported that 41,126,512 visitors came to Las Vegas, finally shattering the 40m visitation ceiling that only five years ago looked impossible. Like other markets, the recession forced Las Vegas to react to the changing conditions, but unlike other markets, in true Las Vegas manner, it beat all expectations. The story of how this happened has lessons for all of us involved in strategic marketing and business.

BUST!

The year 2009 was a bad one for Las Vegas. By year-end, the 43 properties on or around the Strip reported gaming revenues of $5.5bn, well below the $6.8bn reported from the 38 properties that made up the market in 2007. It was also a bad year for Atlantic City, as it posted revenues of $3.9bn, significantly less that the record revenues of $5.2bn in 2006. Unlike Las Vegas, the decline has continued and in 2014 the final revenue total was $2.7bn, less than 50% of the previous high.

By 2014 Las Vegas had all but recovered, posting gaming revenues of $6.3bn, but that is only the beginning of the story as the visitation numbers are staggering. Build it…and they might come. The history of Las Vegas is a story of excess – either excess demand or excess supply!

When the Tropicana (1957) and Stardust (1958) opened, the critics argued that there was no demand for these properties, each with over 1,000 rooms. For a time they were correct, but when the Convention Center opened in 1959, the demand for midweek hotel space met the excess supply that was needed for the weekend visitors.

Between the opening of the original MGM Grand (now Bally’s) in 1973 and Mirage in 1989, there was no significant Strip resort development, but the case for untapped demand was evidenced by Steve Wynn’s gamble, and the 1990s saw 10 resorts open with nearly 30,000 rooms within a short walk from the Mirage’s volcano. In 1990 the historic Convention Centre was demolished and a 1.6m sq ft new centre opened, expanding to 1.9m sq ft in 1998 and 3.2m sq ft in 2002.

But the 2007 recession was somewhat different. Between 2007 and 2009 the 39.1 million visitation level didn’t just stagnate but actually collapsed to 36.3 million, which coincided with a new supply of almost 11,000 new rooms on the Strip, as the Palazzo, Encore, Vdara, Mandarin Oriental and Aria opened their doors. Occupancy targets were not met and if one looks back at the news columns at that time, some believed that there was excess supply that may never be met.

Steve Wynn, G2E 2014
Steve Wynn, G2E 2014

CHANGING FACE OF THE CUSTOMER

“It’s always been that the non-casino story, was the story. It was never the slot machines. They have been everywhere for centuries and nobody gave a damn about them.” – Steve Wynn, G2E 2014.

This summer Gary Loveman steps down as CEO of Caesars Entertainment. Loveman’s success was built on offering additional value to Total Rewards players, whether in Las Vegas, Atlantic City, Tahoe or throughout the regional casino market, by understanding the behaviour of gaming customers and creating experiences for customers through an inside-out business model. The antitheses of Loveman’s data-driven model is Sheldon Adelson and Steve Wynn’s top-down decision making, which is based on giving customers what they want – or what ‘we’ think they will want.

On one level, the reinvention of Las Vegas was nothing particularly innovative. Some chose to initially look internally and adjust their business models, but others looked outwards and met that excess supply, by stimulating demand by identifying a new segment of customers.

The LVCVA reports annually on visitor profile. In 2009, 72% of visitors were 40 or older. By 2014 this was 57%, and the average age had moved from 50 to 45.2. A total of 19% of visitors were from abroad – up from 14% in 2009. This is a huge shift in visitor profile. New customers are younger, international and are not traditional gambling customers.

In analysing these figures some more, we note that if one discounts the gaming spend, non-gaming customers are actually more profitable than gaming customers. Non-gaming visitors’ spend has increased over $45pp in the past decade, whereas the gaming segment’s non-gaming spend has risen only c.$8.50 over the same period. Considering that there are considerable costs in managing the gaming customer’s expectations in terms of incentives and volatility (gamblers actually sometimes beat the house!), the non-gaming customer clearly becomes an obvious target customer.

Las Vegas Sands Convention Centre
Las Vegas Sands Convention Centre

What can we Learn?

  1. Analyse and Strategise

This may sound like common sense, but it took some Las Vegas resort operators time to analyse what was going on, while others who rushed in made some costly mistakes. The established rules of resort management failed in the early days of crisis management. Conventional wisdom based the response to 2008 on 2001’s 9/11 ‘shock’ rather than the 1950s oversupply crisis. The initial response was to slash costs and drop room rates, believing that visitors would still come, but spend more on gaming if less on rooms. When room rates fell, gaming revenues did not compensate. By ‘comping’ rooms, what the casinos saw was a deterioration in the value proposition, and it has been a five-year battle to creep ERVs up to where they were in 2008 in Las Vegas.

A similar price-leadership strategy has all but destroyed Atlantic City. The double whammy hit, as rooms became uneconomic to service and casinos offered incentives that eliminated the house advantage in order to try and achieve revenue targets. The effect has been to erode the value proposition to the point that casinos have closed.

  1. Give customers what they want, now!

Harvard Professor, Anita Elberse writes that we are moving into a ‘blockbuster’ society, where entertainers, sports stars and mega-spectacles form the basis of key experiences in modern society, and people want to be part of them. If this is the case, Las Vegas is the blockbuster town for the millennial age, with the best dining experiences, hottest clubs, leading DJs and great product.

Las Vegas’s operators have curated a calendar of must-see events, but also invested in a portfolio of must-do experiences. These limited time engagements and residencies have both created visitation and increased revenues – there is a belief that the show that Las Vegas can put on is better than anywhere else.

It was reported earlier this year that seven of the top 10 nightclubs in the USA are now in Las Vegas, producing almost $450m per annum, with Omnia, the latest offering at Caesars Palace, reported to have cost over $100m to construct.

  1. It’s just business

In 2014, 5,169,054 business people attended 22,103 conventions. Local executives’ opinions on President Obama’s advice after AIG’s collapse, for federally supported intuitions to avoid conventions in Las Vegas, ranges somewhere between unhelpful to malevolent.

Despite the President’s caution, Las Vegas has become a place to do business. The Convention Center has grown to meet the demand for convention space and the move by the LVCVA to acquire and implode the Riviera to build over 900,000 sqft convention space only emphasises the importance of this in Las Vegas’s future.

Moreover, conventioneers spend more. They see shows, dine on the corporate dollar and perhaps a spouse will gamble or go shopping. Seeking to attract group and convention business is a sure winner in developing a sustainable business model. It is my hypothesis that Vegas’s reputation as a place for international trade will only enhance in the coming decade.

  1. Work out what your competition is – and better it!

Las Vegas has a structured and focused approach to challenging other convention towns. Thanks to the Hangover and other movies, Vegas is the place, globally, where one has their bachelor party or indeed any other landmark event where a group can come and spend some money and have some fun. For the SoCal group (which still constitutes c.30% of visitation) Las Vegas is competing with any of the beaches and highlights of California, so must have bigger clubs and better DJs. For each segment of visitor, the resorts identify that customer, what they want and when they need it, and deliver that better than the competition.

  1. Innovate ‘outside the box’

Listen to Steve Wynn. Las Vegas has realised that it really isn’t about the casinos. Las Vegas has gambled on retail, nightclubs, restaurants, conventions, shows and attractions of all shapes and sizes, and visitors seeking experiences have chosen to save money, book flights and travel to the middle of the desert for that escape from reality.

If you want your customers to be loyal in a competitive environment you have to give them something to be loyal to, and give them a reason to express their loyalty. Innovating, changing and creating something new is always appreciated by visitors.

The Las Vegas Strip posted a 5.54% year-on-year decline in gaming revenue over the past six months. This time, nobody is worried.

 This article is adapted from the original, published by Gambling Insider: http://www.gamblinginsider.com/

LV Sign

Electile Dysfunction Disorder

Bits of me are not working correctly. Maybe it is my age or lifestyle over the past 20 years, but I have a problem.

As a strategist I love elections and political campaigns.

Like the columnist and politician, Daniel Finkelstein, I mark key life events around general elections, but his is the first general election since 1992 where I have not campaigned. In fact I will be out of the country on election day and will not be able to vote.

In 1997, I was in the middle of my Undergraduate degree. After graduation many of my contemporaries in student politics moved in to polling, policy and politics – as did I.  Five years ago I was undertaking an Executive MBA where my main focus was strategy. Subsequent to finishing this, I have continued to research and advance my thinking in the area of Strategic Marketing and approaches to customer loyalty – which I suppose is the aim of political parties in campaigning season.

I have met with senior politicians of all stripes in the past 5 years and shared some of my insights with them, so I think I have an understanding of what goes on both on the ground and in the sky.

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Strategists and the Message

Ideological philosophy is not enough to win an election – indeed it is arguable hasn’t been for decades. Voters are looking at their political parties to present a competent, coherent and credible strategy for government and have it communicated.

A strong political strategy starts with understanding the core values and needs of the electorate and providing a policy response.

Philip Gould’s The Unfinished Revolution features this insight from Tony Blair:

“One of the most common fallacies in Politics is that you can have great communications and lousy policy and win. You can’t. People may admire the campaign, but it won’t prevent defeat. The 1987 election was a classic of this genre… Owing to Peter Mandelson’s brilliance, the campaign was stunning. We still lost by a landslide.”

Political strategists poll. In Netflix’ series House of Cards, everything is polled, from the colour of the candidate’s spouse’s hair to the use of keywords in speeches and the same is true in reality. Political strategies are created in two ways, either top down or bottom up, however even the most patrician of strategies must try and understand the voter.

Watch old party political broadcasts (I am sad enough to be an owner of the old VHS tape acquired from Politico’s Bookshop, back in the day). This was top down politics, from all parties, but with the advent of targeted polling, big data and the ability to customer segment, all political strategies now have an element of bottom up, even if they are really top down. Segmentation by not just demographics, but also psychographics.

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It strikes me that the Conservative Party’s entire election strategy is based on three tactics:

The first is the appearance of economic competence. This is nonsense. Yes the economy is improving, but after a sustained period of recession, it was difficult not to get growth, and they nearly managed that! There is a collective short memory and the coalition’s economic strategy did a 360 turn and when the cutting didn’t work, they shifted to spending to stimulate. So when the monetarist strategy failed, they went back to Keynesian-lite. They implemented the policy that they opposed when it was proposed by Labour.

Secondly, the opposition leader is unfit to govern. I comment on this below, but by painting the opposition leader as weak, then ruthless, then “red” even that strategy is comical. This is an import from the USA and Australia, however the big difference from those countries and indeed past elections is that this is no longer two or even three party politics. Indeed the last national election was won by UKIP, the SNP are the largest party in Scotland. Negative campaigning directly against a leader is becoming a zero-sum-gain as the Conservatives reinforce perceptions of their nasty side.

Finally, Identify swing voters in marginal seats and bribe them with things that will make them money. So far we have seen Conservative plans to freeze rail prices, but criticise Labour for calling for an energy freeze, to criticise Labour for unfunded promises, but promising an unfunded amount to the NHS, but worst of all, by promising renters the right to buy from private companies with state money is a scandal, if not illegal! It is like saying a Government will force McDonalds to give free food to all hungry people!

Over the past decade the Tories have hopscotched from “Are you thinking what we’re thinking”, which never really meant anything, other than appealing to people’s fears and concerns, to this opportunistic bag of tactics, rather than a coherent strategy.

Today’s Labour is very similar. Everything is polled and analysed. Labour had had time and resources to build a map of Britain. However when creating the policy responses to Britain’s problems, the response is not strategic, but tactical. And tactically wrong.

The Liberal Democrats will struggle, how can a political strategy sustained for decades as the opposition campaign as incumbent?

The SNP, UKIP, Greens and others fall into the category of identity politics, which I have written about earlier. To counter this strategy it is very difficult as the premise of debate is not even as the vote isn’t about power or even policy, but identity.

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Why I Left The Labour Party

When I cancelled my direct debit late last year, I felt, to paraphrase President Reagan, “I didn’t leave the Labour Party, the Party left me.”

Fairness, equality and social justice, not to mention opportunity, meritocracy and social mobility remain as core to my identity as they always were, but the leadership of the Labour Party no longer had resonance with me. What I saw was opportunistic, ignorant and a lack of judgement on issues that were of key importance to me.

Specifics? Well, first of all is the rejection of the Blair Government. Britain was transformed under Tony Blair’s leadership. The cities were renewed, London became a key global city and opportunities for people from all backgrounds became enhanced. The response to this from the leader was some kind of rejection, perhaps embarrassment. When the financial system collapsed, the Government supported it. If it had not, then everyone – except the most wealthy – would have been wiped out. This is the reason for the increase in the national debt. Britain got better after decades of neglect and in crisis, the Government stepped in to save ordinary families, their savings and their pensions.

Phrasing the debate as rich versus poor, bashing Stephen Hester at RBS (who did an exceptional job) and the financial sector is the politics of envy. Quite frankly, if the rich got richer, I don’t care – as long as they pay their taxes. Incidentally, I have some support for the “non-dom” argument, not that those who are not domiciled in the UK should have to pay tax on foreign earnings, but how the status of non-domiciled people are determined; that a tax benefit is inherited on a hereditary basis is nothing short of farce! But that is not the way that it is being sold, it is a “them and us” argument, which is not palatable in my view.

Likewise, the producers versus predators rhetoric is also misleading as efficient financing and capital structures are business strategy and not a matter of morality or Government. It is the role of business leaders to maximise returns for their shareholders – including the millions of investors and pension holders – and to form and shape their company’s ethics to the point that CSR is a core part of what they do, but it clearly not the role of the Government.

For over 20 years I have been aware of the rise of radical Islamism, a vicious, fascistic doctrinal movement that is in diametric opposition to the liberal views of modern society. It makes me sad to say this, but throughout history, there is no evidence that a liberal response to this type of evil works (please see my earlier post on Chamberlain).

As tens of thousands of Yazidis were murdered in Syria, what did the Labour leader do? When thousands of radical Islamists hijacked the cause of the Palestinians in Gaza and called for the murder of Jews on the streets of London, what did the Labour leader do? When a Member of Parliament leads a charge to recognise a terrorist backed State, what does the Labour leader do?

Labour took polls, it found bandwagons and the leader jumped on them. These gross errors tell me more about the Labour leader than any campaign. I don’t think he is weak or stupid or indecisive or uncharismatic or anything else thrown at him. I think his lack of real world experience does not give him the perspective to have good judgement and as a result is just plain wrong on the issues that matter to me.

As alluded to, Labour needs to keep the core base in tow especially in those key marginal seats, which includes a large amount of British Islamic votes. Labour’s leader’s response to Islamic radicalism and the Middle East tells me his thoughts are about more about those votes than mine.

I support the Labour Party and wish them well. But I cannot pay money to be a member of an organisation, which has a leader with such poor judgement.

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Analysis

I remember in 2010, I spent the day leafleting in a marginal, but winnable constituency with a first class Labour candidate. By 5pm news was filtering in that Gordon Brown had called Gillian Duffy a bigot when a microphone has been left on him. The Conservatives held the seat, Labour lost a great potential MP.

I am not a pollster with insights other than what is printed in the media.

A million things could change and what I write could be irrelevant as soon as I publish, but as I stand, with three weeks of campaigning to go, this is my reading.

Tony Blair claimed of David Cameron’s Conservatives, that “If we can’t beat this lot, we don’t deserve to be in politics”. He was right.

Labour will not win this election. They don’t deserve it.

Neither do the Conservatives.

The electorate is far more sophisticated than of yesteryear. I don’t believe that their argument surrounding economic competence is such a major driver as the Conservatives want it to be. Ed Miliband is proving he is not a weirdo now that as he has direct media exposure and on reflection voters see right through the bribes on offer as they can’t reconcile the language of “austerity” with unaccounted giveaways. This is bad strategy.

Labour has the best candidates and the best communication. However, their strategy is flawed.

Creating a strategy to win an election is about understanding needs and providing the policy response that works. Neither party has provided a clear policy response. The Conservatives are cynical. Labour’s leader has demonstrated terrible judgement.

This entire election campaign is dysfunctional. I am not enjoying it.

I am delighted to have no emotional investment in this election campaign and even happier to be abroad for the final weeks of it. However, I don’t think it will be long until we will be having another one, hopefully with a different dynamic and different outcome.