Harrah's Secret

by Bodog Casino | Mar 10 2010

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Ask any businessman and he'll tell you the recession is far from over.

Businesses are dropping like flies all over the globe as the bad economy is draining the life out of people's wallets and therefore a businesses bottom line.

Amidst all that Harrah's Entertainment has survived and people want to know the secret to their success.

Harrah's was able to steer clear of bankruptcy while having massive amounts of debt throughout our recent recession and their tips to those at the Turnaround Management Association of Las Vegas were in some ways fairly simple: cost cutting and getting back to basics.

Harrah's senior vice president of communications Jan Jones says that it was CEO Gary Loveman that pushed her to make tough financial choices.

"I took all my information to Gary and told him he was putting the business at a huge risk (by cutting her budget). He said to me, ‘If what it takes to save this business means that I have to close the entire corporate office, then that is what I will do. These are your numbers. Make them work.' And then he got up and he left.

"Looking back at it, I know now that it really took a leader who was saying, ‘Hey, get over it.'"

Jones was mayor of Vegas during the time of its economic boom, 1991 to 1999. She says that gave her a false sense of security when dealing in the casino industry.

"We couldn't do anything wrong," Jones said. "We were the fastest-growing city for 10 years, and we had the capacity to reinvent ourselves. Money was so available and credit limitations were not restricted."

Unfortunately by 2008 Harrah's had declining revenue and tons of debt building up, something had to be done.

Within nine months Harrah's cut $550 million in annual costs.

"We said we were no longer going to tolerate differences in performance in very similar departments, regardless of market and customer base," said Chief Financial Officer Jonathan Halkyard. "There was nowhere to hide in terms of productivity."

Harrah's conducted numerous surveys asking customers what kind of service they preferred so they could make changes in the right places. The company paid particular attention to positive responses to learn what customers liked, but Halkyard admitted some people were saying "our service stinks."

The company used a Total Rewards loyalty program to learn from customers what it was doing right and what it was doing wrong.

"Customers were saying, ‘We know this (recession) is bad on you, but don't make it bad on us by closing restaurants and making the lines longer,'" he said.

During the process, Harrah's trimmed $4 billion in debt. Today, Halkyard said Harrah's markets are beginning to stabilize. But he said the company is still preparing for 2015, when a large set of debt payments are scheduled.