The CMO Interview

As Vegas Comes Back, Hard Rock Repositions

After Two Years With Flat Ad Budget, CMO Phil Shalala Gets Creative in Branding Hotel's Evolution

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NEW YORK (AdAge.com) -- The Hard Rock Hotel & Casino in Vegas has always been a bit of a renegade. Located a couple of blocks off the legendary, resort-packed Las Vegas strip, the Hard Rock never seemed to want to be part of that Las Vegas. But that's changing, sort of.

Phil Shalala
Phil Shalala
Often viewed as more of a boutique, and therefore unique, hotel in Vegas, the Hard Rock spent a lot of time and money over the past two years, a period of near unparalleled economic recession, building a $750 million tower -- largely in an effort to attract an "older and [more] sophisticated demographic," said Phil Shalala, CMO of the Hard Rock. Mr. Shalala, who has been with the property for the last seven years, said the new tower has presented him with one of his biggest marketing challenges to date: repositioning the Hard Rock brand to reflect its new maturity.

Mr. Shalala, who was a partner at a marketing and athlete-representation firm called The Family before joining the Hard Rock, said much like the rest of the country, the Vegas economy is coming back, and that's presenting him with new opportunities. "We're up in bookings, and occupancy on weekends is 100%," he said. "People are starting to come back and stay longer. It's a sign that people want to start having fun again and spend some money in the process." But he also has his work cut out for him. Not only is the Hard Rock working to attract this new -- and arguably more lucrative -- demographic, it has to do so while keeping its existing client base of younger partiers coming back -- all with an ad budget that has remained flat the last two years.

"Typically, if we were to launch this property three to four years ago, we would have a budget five times what it is now, so we have to get creative," Mr. Shalala said. "Before, we had 50% to 60% of our marketing dollars allocated toward local print, radio, advertising and events. That has shifted toward online and experiential-based efforts."

And he's relying on smaller agencies to get the job done. The hotel works with SixteenFifty out of La Jolla, Calif., and New York-based PR shop Allison & Partners. "We don't engage big-picture Madison Avenue-type agencies or the types of media buys and programs they produce," he said. "You really need to live this lifestyle to build an effective program for customers. A lot of what we do is experiential, and if you're not tapping into the experience of the customer on a day-to-day basis, putting up a billboard and doing TV spots do nothing for you. We try to keep it within our own world and [with] agencies that are ahead of the curve."

Mr. Shalala recently spoke with Ad Age about the challenges of maintaining the hotel's image while luring new clientele, reallocating marketing dollars and the use of barcodes as a marketing device.

Ad Age: What's been the biggest challenge for the hotel during the last year-and-a-half?

Mr. Shalala: We've been under construction during that time, which was good and bad. Good because you had the ability to defer some of the potential downtrends to the result of construction, however, it was bad because it was hard to get things done with what was going on.

My biggest challenge now is transitioning the brand into what we built. This has always been known as the place to come and party, see beautiful people and be seen, and we still have that and always will. But with a new $750 million tower, we're transitioning up to a little older and more sophisticated demographic. And I need to establish what that means and what that brand means.

Ad Age: Was there a point during the recession at which you thought about cutting back on the expansion plans?

Mr. Shalala: We knew we were opening this expansion in December and wondered how all of that was going to affect us. But we stuck to our game plan and didn't do anything drastic or react to the press and negativity that was out there. We might have even gotten a little bit of scrutiny for it, but it's paying off. And that's a message for other marketers: Stick to your guns. There are some things that you can and cannot do, but there's nothing that can't be overcome.

Ad Age: Being set off of the strip always gave the impression that you didn't want to be part of that typical Vegas scene. Is that changing?

Mr. Shalala: We're never going to go away from the bones of the Hard Rock and what this place was built on. You will always have that vibe and experience. But now we're providing a different offering. I was a customer here for a long time. I was the guy running around this place having a good time. Now I'm a little bit older, have two kids and little bit more money in my pockets; I don't ever want to lose that lifestyle that I live but I might want an area that's a little bit nicer and quieter. We're getting back a customer that we might have lost to the Wynn or Bellagio. They still live the lifestyle but felt they were entitled to a nicer product because they could afford it. Now they have the nicer product and the lifestyle they want to be part of.

Ad Age: So how are you reaching these different types of consumers?

Mr. Shalala: We're doing a lot of search marketing and CRM and increasing our presence on certain types of sites such as Expedia and Travelocity. We're also re-launching a completely new branded site that represents the property in two months. It's important for us to get the customer to go to our website first as opposed to those other sites.

Ad Age: What types of social-media outreach are you doing?

Mr. Shalala: We're using Facebook and Twitter. We launched a promotion called Twitter Tuesday where we provide our followers with special offers every Tuesday. We are also getting into barcode technology and ScanLife. We're launching a program where guests, using their phones, will be able to take pictures of barcodes that pop up in random places around the property, and then special offers will appear on their phones, like a video of someone telling you where to go or a coupon for free drinks. Doing large-scale, typical marketing 101 doesn't work for us.

Ad Age: How have the marketing dollars shifted?

Mr. Shalala: For whatever reason, consumers have more time to spend during the day online so we're pushing more marketing dollars online toward search, CRM and direct mail. We're also spending more time on segmentation of our direct-mail segments and making sure the right people are getting the right offers at the right time. And we're spending a little more time in feeder markets like Los Angeles, Phoenix, San Francisco and San Diego than we have in the past. We have to push people a little bit harder these days, not much, but a little, to get up off the couch and make that one-hour flight to Vegas.

Ad Age: What's the challenge or key to standing apart from everyone else in Vegas?

Mr. Shalala: The offering you provide is the key. Getting people to try the new product and brand, and letting them see they are still going to get that fun, edgy and irreverent lifestyle at the Hard Rock is what differentiates us a lot. It's really about what we do and our offerings on a day-to-day basis that separate us from everyone else. We try to extend our brand outside of just being a hotel and casino, and that's also different. We developed a beverage three years ago that had distribution with Coca-Cola. We're working on taking some of our brands [recognized as being Hard Rock properties] and extending those to people outside of Vegas.

5 Tips

  • 1. Keep your agency roster lean and filled with shops that know your brand.
  • 2. If you've launched a major initiative and market conditions worsen, stick to your guns.
  • 3. Never forget what first attracted consumers to your brand, and incorporate that in any new branding.
  • 4. If large-scale marketing 101 doesn't work for you, don't do it.
  • 5.Remember that your offering is key and the thing that differentiates you from everyone else.
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