Rank battles to revive the UK bingo-casino brand
Posted by Gavin Smith on 13 Jul 2009 at 08:07
The bingo hall, a once-great British institution, has recently been facing the prospect that its number might finally be up.
Over the last three years the bingo and the casino industry has had to face a multi-pronged assault. The recession has been tightening and legislation has led to the loss of high jackpot gaming machines, taxes have been jacked up and there's been a squeeze on the spending power of customers.
Add to that the arrival of the smoking ban, and even some of the biggest names in bingo and casino gaming are feeling the pinch.
Ian Burke, chief executive of bingo and casino giant Rank Group, told the Times he hopes to inject life into the format even in these troubled months. In order to survive many experts expect that the former staple of the British punter will have to face a number of changes and bingo venues will have to be revamped or closed. Many halls, particularly older facilities, have already shut their doors, but new facilities have also sprung up.
Mr Burke is a central figure in the revolution which will have to sweep through many regional casinos and bingo halls if they are to survive. More sophisticated venues are appearing in an attempt to turn casinos and bingo halls into definitive local leisure destinations which appeal not only to the older generation.
Rank's approach has involved transforming its older Grosvenor format to a brand called 'G Casino'. The firm has 33 operating casinos and 13 non-operating licences.
The ninth 'G Casino' will appear in Dundee by the end of 2009 and Rank is looking to convert around 20 of the other venues to the G brand, according to the Times. The result should be that Rank ends up with 46 casinos in the UK, with 30 of them G Casinos.
Traditionally the image of the British casino involves a male-dominated environment, and this is one of the things the G Casino brand hopes to change. The Times adds that while Mr Burke does not expect to improve the typical average number of visits per customer of six times a year, he does hope to alter the number of customers and the amount of cash they spend in the venue.
Quoted by the Times, Mr. Burke said: "The G casinos are appealing to more 25-35s and more women, the big opportunity is positioning our casinos as modern leisure businesses."
He added that the company's venues have always been popular with those dubbed 'transactional customers', who like a flutter against the house playing cards or roulette. The aim is now to keep hold of those customers but to broaden the approach of the casino to bring in new ones.
He added: "We’re partly in competition with what the rest of the leisure sector is doing and partly in competition with the home. G Casinos still have the traditional tables, but they also have bigger bars and restaurants and poker areas.”
The times report adds that Rank's Mecca bingo brand is also undergoing similar changes. Leading this is a £5 million new venue in Beeston, Nottinghamshire, covering 25,000 sq ft and incorporating themed nights. An eye-catching edition is a lounge with a glass screen where younger people can enjoy themselves "without being shushed".
According to the Times, Mr Burke added: "I think the industry’s given up on the former cinemas, but how many retail leisure businesses on the high street do you know that have been rejuvenated by management because they’ve taken different approaches?”
Of the venues closed by Rank, a lot of them were ex cinemas which were hit hard by the smoking ban. The recent budget delivered another broadside in the shape of a hike in bingo tax from 15 per cent to 22 per cent, meaning more clubs have begun to struggle. But Mr Burke also explained to the Times how he is determined to exhaust all options before shutting more venues.
Mecca's managing director is Mark Jones, appointed by Burke, and the former boss of premium bars and restaurants and Pizza Hut UK. Mr Burke added: “I wanted somebody to come in with a fresh approach to these things. We needed someone to see the opportunity not only for the Beeston format but also for the former cinemas by applying the same customer insights."
And not everything has gone against Rank recently. The Times report also points out that the High Court recently came down on the side of the company in two claims against HM Revenue & Customs regarding overpaid VAT to the tune of around £100 million. According to experts, the final total could be as much as £200 million.
The paper also reports that Mr Burke has a number of other key problems to sort out, including straightening out Rank's internet operation, revitalising the company's bingo clubs in Spain, and discouraging the government from further taxation on bingo.
Furthermore, the times adds that in the future, Rank may even explore acquisitions, especially internationally.
But the paper also points out that Rank could actually face a takeover. The biggest shareholder of the firm is Guoco Group, with 28 per cent, and belonging to businessman Quek Leng Chan.
This is significant as Mr Burke and Mr Quek have something of a history. Mr Quek was the biggest sharholder of the Thistle Hotels when Mr Burke was chief executive, the Times adds. Back in 2003 the Malaysian businessman started a hostile bid for the firm. The Times says Mr Burke was subsequently dismissed and faced legal action for opposing Mr Quek.
But history is history, Mr Burke told the Times, saying: "He’s a shrewd businessman. He’s got a lot of cash. I think we’ll see him doing something quite dramatic in the next two years as asset prices come down. He’s always liked hotels and casinos.”
This poses one obvious question: could Mr Quek go for Rank? Welcome to the unpredicatable saga that is the modern British casino and gaming market.
