Casino operations depend on patrons visiting Las Vegas. To encourage tourism, hotel operators discount their rooms and food service. Traditionally, hotel room rates and buffet style dinners were kept low. Recently, there has been a trend to take the tourism for granted and to increase profit expectations on the rooms and food service. The market has a distinct high, middle, and low end. The intelligent hotel operators have begun to segment their visiting public. It will probably always be possible to stay in Las Vegas cheaply, but the days of outstanding bargains at high-end hotels may be finished.
As mentioned in the Comps section, Las Vegas Casino Operators have an incentive to bring guests to their casinos. Every guest staying in the Hotel pays the Room Rate and has the potential to generate Casino Revenues. If we assume that in a zero-sum game where casino guests visit each other's casinos evenly, then over the course of a visit, a Hotel can safely offer discounts of $41.05 to $205.26. This discount can apply to the Room Rate, Food and Beverage operations, or other Hotel accomodations such as the Spa.
The non-gambling guest has the opportunity to visit Las Vegas at a discount relative to other vacation locations. Assuming that :as Vegas is a desireable vacation destination, the savvy traveler can visit the city and receive a monetary discount on their Room Rate. The average two-day discount would equal the average amount the casino calculates that the patron would lose.
There are a certain number of frequent gamblers that can stay for 'free' in Las Vegas. Hotels actively track these frequent gamblers and heavy gamblers, the whales. These guests bet often and/or heavily. Since the odds are against them, the House is willing to bet against them and to comp their visits.
In the past, the Pit Boss would offer 'comps' to those people who could be seen staying at the tables. The four basic level of comps are: (1) free drinks, (2) line pass (buffet), (3) buffet pass, and (4) a discounted or free hotel stay.
In a normal business, discounts serve to offset losses from excess capacity. In Las Vegas, this is the same: discounted rooms increase the demand stream to an inelastic supply. The difference here is that customers coming to Las Vegas will most likely spend (lose) money in the casinos.