For country hotels the picture is a little different from the successes the Sydney hotels see. In country towns in particular you compete directly with local clubs in a way city hotels don’t, with much more crossover of markets between venues in the country, (for example you get the same customers through your hotel the clubs do, but this doesn’t happen too much in city hotels).
Many city hotels are moving to at least having TITO (Ticket in Ticket Out) availble for their customers, and this has forced an upgrade to much of their poker machine technology. The newer machines are driving their business and ensuring they focus on their gaming rooms, service levels and food/beverage options.
In country areas the hotels and clubs have traditionally offered similar products to attract customers but recently the country clubs have started to lift their game in these areas. As the cycle always works, …..the country hotels will soon follow.
Similar to city hotels there are several interesting points to ponder when investigating and analysing the average net per machine per day for each LGA (local government area) for the year ended June 2015. The important general picture is:
- The only country area where hotels earn above $200 net per machine per day is in the Wyong LGA.
- Many of the top group of LGAs in country regions are all adjacent to capital cities, such as Gosford, Queenbeyan, Shellharbour, Hawkesbury and Wollongong.
*Note: Hover over map and click for enlarged image or download PDF link: Country NSW LGA’s by average $ Net per Machine per Day.
- Many of the other better ranked regions are along the east coastal strip, particulalry around Newcatle and the Ballina Byron area
- Many hotels out in the mid-west such as Dubbo, Orange, Bathurst, Tamworth, Griffith are also relatively strong on gaming results. Many are regional university towns that would also have to compete wth strong clubs, cafes and cheap food deals. Competition can definitely keep you on your toes.
- There is a strip behind or around the mountains through the Hunter region to the north, and along the far south coast that are a little less successful than the average.
So what does it all mean – Using the LGA $Net Data to Benchmark your hotel
The chart below shows the level of competition within each LGA and also the average number of machines.
*Note: Hover over chart and click for enlarged image or download PDF link:Hotels in NSW Country LGA
To use this chart as a benchmarking tool, if you have more than the average number of machines for your LGA in your hotel, but aren’t achieving the average net per machine per day for your LGA, then maybe you have some work to do. For example, if your hotel is in Gosford and you have over 22 machines, but aren’t achieving $178 net per machine per day you could look at options for a change.
*Note: Hover over chart and click for enlarged image or download PDF link:Hotels in NSW Country LGA_2
- It is important to note that there is a correlation between the LGA’s with the most successful hotels on average net also having the highest average number of machines in the hotels. You need to be realistic: if your hotel has only 10 machines in an area where the average is 28 machines you won’t be at the top of the ranking tables that are commonly used in hotels, as they are based on total turnover. By using a “net per machine” benchmark such as the one above, it will be a better tool to use when trying to work out what to adjust.
- Hotels that have more machines are more successful because they can offer a wider variety of games to their players. When purchasing a machine any hotel has low numbers of machines, (therefore game choices), than a club so concentrate on purchasing multigame machines that have several games in the one machine. Every manufacturer makes them now such as Aristocrat’s ‘Players Choice’, IGT’s ‘Multistar”, AGT’s ‘Multiplay’, and Scientific Games’ ‘Multi Deluxe’. These will give you 4-5 extra games so just one or two of these machines each year will lift your results and give your players great game choices.
- All of the manufacturers have payment plans that you can use to buy a new machine instead of a second-hand game that won’t help increase your gaming results. The payment plans allow you to pay off the machine through your monthly cashflow rather than capex but you can still depreciate it off on your books at the same rate you do for a normal machine purchase. Yes, you do pay a little extra over the 2-3 years but you get free conversions throughout that period so you only have to make 2 game changes in that time to recover that extra cost. When you make the original machine purchase you can often negotiate a cheaper (or free if you buy a machine every now and then) game conversion for one of your older machines. This will give you several new games for your players: 4-5 in your new multigame and 1 for an older machine.
- Obviously every hotel is different and the results will be affected by many different things such as other hotels in the area changing their gaming room, gaming machines or service levels. Some hotels give away incentives to get players in that also has a cost, such as a $10 steak deal, but this doesn’t show up in the gaming results data. Make sure you at least know what your competitors offer.
- The success of the Sydney hotels has been updating their gaming machines but even Sydney hotels would normally only purchase a few machines each year. Clubs use a formula of changing around 20-25% of their gaming machines each year but that includes game conversions as well.
One of the best places to go for great information is to talk to your gaming machine reps and they will have lots of fresh ideas for you to consider. They see hotels and clubs right across the state and get lots of good information from their city colleagues.
Click here to read Part One: Where to buy a pub in Sydney: Average net per machine per day by LGA’s
Raw Data sourced from “Hotel Annual LGA June 15 PUBLIC”, NSW Office of Liquor, Gaming and Racing. Purchased Aug 2015
Maps and Graphs designed by The Drop Network Pty Ltd and are subject to copyright– maps are intended to give general indicators of each LGA and only generally refer to a town or suburb’s specific geographic location.