Las Vegas has grown from humble farming beginnings in the middle of the desert to an oasis that captures the imagination and money of people from all over the world.
You might be one of the 40 million people who visited Las Vegas last year or one of the hundreds of millions who have been there in the past decade. If you’re at all entrepreneurial, you were probably captivated by the incredible transfer of money that happens every day throughout the city.
Most of us will never have a business based on gambling or prostitution, so what could we learn from a city that has a history that lives up to its name of Sin City?
The fact is that most business owners could learn a thing or two from Las Vegas.
Build on your strengths
In the 1920s and ’30s, gambling started to draw people to the Nevada desert and the little town of Las Vegas.
With the start of the construction of the Hoover Dam in the 1930s, the state government saw that workers were spending their earnings in Las Vegas and seized the opportunity to draw revenues from the growing gambling business. The government legalized gambling and licensed prostitution in the state in order to tax the proceeds.
As its fame grew and tourist flocked to the desert city, accommodation expanded to meet the needs. It’s rare now that a hotel – or for that matter a gas station – in the area doesn’t have an attached casino or at least a few slot machines.
Diversify in order to expand
Not everybody gambles, but Vegas has become addicted to tourism and has expanded to meet the needs of visitors. Entrepreneurs recognized that its place in history didn’t need to be limited by the constraints of its seedy reputation and developed a cultural aspect that has stood the test of time.
From the 1950s, with the likes of Dean Martin and Frank Sinatra, Vegas has drawn huge crowds with a slew of shows and concerts.
Not one to miss out on the chance to attract even more tourists – despite the risk of radiation poisoning while the United States government tested nuclear bombs in the Nevada desert – the community invited travellers to stay and watch the tests, as it lived up to its nickname of Atomic City.
In more recent years, Las Vegas has captured the attention of wedding planners, conventions and sports tournament organizers to provide even more reasons to visit Vegas.
Hotels are designed with fantastic budgets and imaginative themes to capture your attention and draw you back year after year.
Increase your margins
For many years Vegas was known for the free drinks and cheap buffets offered to attract gamblers to open their wallets. Those days are long gone. As business owners realized that there was money to be made in food and drink, the cost of a decent meal has skyrocketed.
Whether you’re on the casino floor or just cruising the strip, drinks are no longer cheap, marijuana is everywhere, and the invitation is constant to party at an expensive club or take in a show for several hundred dollars a seat.
Unless you’re in Las Vegas on a weekday, most hotel rooms will cost you hundreds of dollars on the strip. This is a big change from years ago, when travel packages were cheap.
Realizing that they were leaving money on the table, the business community over the past 25 years has increased its margins to profit more from the tourism jackpot.
Hotel costs are no longer limited to your room charge and the $10 bottles of water. At almost every hotel, there’s a “resort fee.” Checking out, I recently encountered a fee of $40 a day. When I asked what it was for, I was told it helped pay for the management of the hotel. I estimated that the hotel I stayed at generated tens of thousands of dollars every day simply by adding the resort fee!
Imagine if retailers could add a ‘location fee’ to the final bill after customers bought a few items. Margins would increase – but probably drive more consumers to the Internet.
Las Vegas has found ways to monetize almost every minute of your visit and extract money you haven’t even made from your wallet. They’ve sold travellers on the idea that it’s the destination and captured the imagination of entrepreneurs, who have been willing to assist the municipality in continuing its growth into the desert.
As business owners, we can’t gamble on our future. But we can learn to think differently and create an experience that draws customers back, year after year, month after month and day after day – just like Vegas.
Dave Fuller, MBA, is an award winning business coach and a partner in the firm Pivotleader Inc. Comments on business at this time? Email email@example.com