It’s been about a year now since Boyd Gaming has reinvented their Player’s Club program. How has this affected their financials and stock prices?
“In a nutshell, there were two major changes,” says Boyd spokesman David Strow: “a shift from three tiers to five (Ruby, Sapphire, Emerald, Onyx and Titanium); and the introduction of a number of new travel benefits for the higher tiers in the program, including trips to Las Vegas, Hawaii and the Bahamas, as well as free cruises through Holland America.” Other perks included “annual gifts of luxury jewelry and technology; and unique and memorable trips and experiences you can’t find anywhere else,” according to a press release.
Discounts were made available on buffets (never underestimate the importance of a discounted buffet), hotel rooms, retail and rentals at Advantage Rent-A-Car. Upon achieving a tier upgrade, a player keeps it through the next full calendar year. As of inception, on August 27, 2018, not all — but most — Boyd casinos had been integrated into the new plan.
That's the way Boyd explains it, anyway. We're sure we'll hear from video poker players who take some issue with the spin.
Such a revision wouldn’t show up in the share price, which tends to be more reflective of external events, such as an acquisition or bad weather in one of Boyd’s territories. Boyd stock prices have remained relatively stable, in the high twenties, notwithstanding a couple of spikes in February and April of last year. In his fourth-quarter 2018 earnings call, Boyd CEO Keith Smith acknowledged that “marketing refinements” had helped drive a 13% improvement in cash flow at the company’s Las Vegas properties. The launch of a redesigned B Connected program did, however, contribute to a $12 million increase in corporate costs.
Boyd didn't break out discrete costs for the re-launch of B Connected, so we can only surmise what they were. However, as Las Vegas locals business continued to march upward, one should not discount the potential impact of the revamped loyalty program. Increased profit in the first quarter of 2019 was “driven by a robust regional economy and operational and marketing refinements.” Locals and downtown players continued to leave more money in the slots and on the green felt.
Revenues, cash flows and operating margins posted further year-over-year improvements in the second quarter, even if Smith no longer spoke of marketing refinements. Cash flow from locals’ play was at its highest level in 14 years. It was much the same downtown, where heavy Hawaiian play led to sky-high results.
It's difficult to make apples-to-apples comparisons to Boyd’s Midwest/South segment, because the company had recently added Ameristar Kansas City, Ameristar St. Charles, Belterra Resort and Belterra Park (the former two in Missouri, Belterra Resort in Indiana and Belterra Park in Ohio) to its vast holdings.
By the third quarter of last year, it was apparent that the changes to B Connected, such as they were, weren’t putting off players, at least according to the P&L. Las Vegas locals generated the highest cash flow in that segment since 2005. Downtown results also continued to improve, which was pretty impressive when one considers the traffic disruption occasioned by construction of Derek Stevens’ rival Circa casino.
So no, other than all the grousing from video poker players, revamping B Connected has been nothing but a plus for Boyd — at least to the extent we're able to read between the quarterly-report lines.
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