Mocha Slot is not afraid of competition from the vast gaming halls of Macau’s upcoming mega-resorts, which are set to swamp the market with thousands of new slot machines. Mocha Slot General Manger Ted Chan believes the company will continue to thrive by providing small but conveniently-located venues devoted solely to machine gaming
In late 2003, Mocha Slot entered the Macau market by opening a modest 3,000 sq ft outlet at the Royal Hotel, establishing the city’s first real gaming brand.
Mocha Slot is the brainchild of Lawrence Ho, son of Macau casino tycoon Stanley Ho, who is himself trying to revive his company by elevating its image – the first step will be opening the glitzy Grand Lisboa later this month.
During Macau’s 40-year casino monopoly, Stanley Ho was happy to generate huge profits by neglecting the main floor and concentrating on the VIP market, where relationships rather than image drive business. Pundits predicted it would take many years for the new foreign casino operators to tap into the VIP market because of the importance of established relationships. However, the rapid and unexpected rise of the newcomers’ share of the VIP market since 2005 – the first foreign operated casino, Sands Macau, opened in May 2004 – has proven image is important for everybody.
Slots were distinctly lacking an image during the monopoly era, when Lawrence Ho believes casinos only included slot machines in order to “look more like a casino.” While slots continue to contribute only a small proportion of total gaming revenue, they are showing explosive growth. Macau’s slot revenue in 2006 reached US$249.5 million – a 64.4% increase over the US$151.8 million collected in 2005. Slots contributed 3.6% of total Macau casino win in 2006, which though paltry compared to their 70% contribution in Vegas, is a vast improvement from before 2003, when they did not even make up for one percent of total revenue.
In 2003, Macau had a mere 814 slot machines, but even so demand outstripped supply, as witnessed by the banks of idle machines at Casino Lisboa. In order to make slots more appealing, Lawrence Ho came up with Mocha Slot, a string of trendy and cosy outlets which focused exclusively on machine gaming.
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Star Performers Mr Chan says stand-alone games from Australian manufacturers, including Stargames, are Mocha’s top performers. Australian games dominate in Macau, with more than 50% market share. As for the multi-terminals, Interblock products imitate the feel of “real tables,” whereas Stargames’ Vegas Star employs a “theatre fitout.” Mr Chan says both types of interface do equally well at Mocha, with customers generally preferring one or the other type.
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Getting Them Through the Door
As discussed in the last issue of Inside Asian Gaming, convincing table-loving Chinese gamblers to try out slots required a novel approach. Mocha Slot’s solution was to first introduce electronic versions of popular table games such as sic bo, baccarat and roulette. These electronic table machines, known as multi-terminal games, offer a hybrid between tables and slots, and are a fairly new innovation globally.
“Most of our players started with multi-terminals because they are familiar with these games,” explains Mocha Slot General Manager Ted Chan. “But slowly they became curious about the slot machines next to the multi-terminals. When they saw more and more people actually winning jackpots, they began to see the point of slots.”
At first, multi-terminal games made up 70% of the machine mix at Mocha and made up for a similar proportion of the company’s total revenue. Following a “migration we have witnessed over the past three years,” multi-terminals make up less than 50% of capacity and revenue, having been replaced by regular slot machines, according to Mr Chan.
Mr Chan believes strongly in the potential of slots, given their “variety of interface, theme and design,” which makes them “more entertaining” than tables games, which are “always played the same way.”
Steady Slot Returns
Macau now has 6,546 slot machines, representing a 91% increase from the 3,421 machines in 2005. The table count as of 2006 was 2,762, representing a 99% year-on-year increase.
Whereas both tables and slots saw similar capacity growth in 2006, the average win per slot per day only declined from US$138 on average in 2005 to US$135 in 2006 (a 1.8% decline), while win per table fell from around US$11,600 in 2005 to US$8,500 in 2006 (a 26.4% reduction). Previously, investment in slot machines was held back by the high marginal returns from putting in more tables. As wins per table continue declining, the explosive growth in slot capacity could pick up further.
Mr Chan predicts Macau will have 14,000 slot machines by the end of 2007 – a more than doubling in capacity. Venetian Macau alone will add 4,300 slots when it opens in July. Mocha, which currently has six outlets, is also looking to open a further two venues in 2007, though it will only make a modest addition to the total count, with its outlets each containing an average of 150 machines. Mocha’s target is to have 1,400 machines by the end of this year, up from the current 1,000.
The new casinos offer huge capacity and increasingly luxurious surroundings, but Mocha is “outperforming more than 60% of the market,” claims Mr Chan. Wynn Macau, which opened in September 2006, is the top performer, says Mr Chan, because “they have a fantastic property. It’s a must-go place.” This, along with the property’s novelty factor and a relatively low machine count gives Wynn Macau an average daily win per slot of around US$375, compared to the market average of US$138. Mocha has three times as many slot machines as Wynn, and despite its lack of casino glitz, its average daily win per slot is about US$213.
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Machine Focused
Asked whether he is concerned about the arrival of mammoth properties like Venetian Macau, Mr Chan responds: “I don’t really compete with the casinos. Sands and Wynn focus on visitation of property. They don’t care if visitors play tables or slots. Mocha’s focus is 100% on gaming machines. No tables, no hotel rooms, no retail. We focus on that, we build our membership loyalty – which takes time. It’s growing. They are playing the same Aristocrat machines. Why are they playing here? Because they know this guy, they know this attendant, they know this floor manager.”
Mocha offers conveniently located outlets throughout Macau and aims to “accommodate the needs of serious gaming machine players. There are a lot of choices for tables. But if you are a serious slots player, come and play in Marina Plaza.”
Exclusivity at Marina Plaza
The Marina Plaza outlet opened on December 23, 2006, including the ultra-exclusive Royal Members’ Lounge. The Members’ Lounge has 31 machines, but limits access to only 50 of Mocha’s 76,000 members – with final access to the lounge to be restricted to 100 members, alongside plans to grow total membership to 150,000 by 2008. As of January – within one month of opening – the average daily win per machine in the Members’ Lounge was double that of the rest of Mocha, with Mr Chan predicting the lounge will prove a much bigger earner relative to the rest of the operation over the coming months.
Whereas the big casinos are targeting visitors from all over China, the serious slot players sought by Mocha Slot predominantly hail from Hong Kong, Macau and neighbouring Zhuhai in mainland China. Of Mocha’s current members, 50% are from Macau, with the remaining members split evenly between Hong Kong and China. Mr Chan reveals “the Hong Kong figure is growing faster than that of China. This year we will do more marketing in Hong Kong, although there are lots of restrictions on promoting gaming in Hong Kong. Hong Kong is a mature, international city. We will do some technical things to target that market.”
Mocha employs player tracking to determine its members’ preferences and offer loyalty points which can be redeemed for F&B and other services. Apart from the Royal Members’ Lounge, the second floor of Marina Plaza operates as a premium area restricted to 1,000 members. Access to the premium area is granted to customers according to a matrix of criteria including volume of play and number of visits, as well as by invitation. Mr Chan emphasizes Mocha’s focus on visitation, with access granted to both high-spending customers who come once or twice a month, and average-spending customers who come every day. Access to the Royal Members’ Lounge is by invitation only.
Benefits of the Capacity Boom
Mr Chan does not worry about the huge expansion in Macau’s slot capacity. In fact, he believes it will benefit the entire market by promoting “leisure gambling” in a city long dominated by hard core table-gaming. Mocha’s parent company Melco will be part of the capacity boom. Melco PBL Entertainment – a joint venture between Lawrence Ho’s Melco and Australia’s Publishing and Broadcasting Ltd – will install 3,000 machines at its flagship City of Dreams mega-resort, scheduled to open in 2008 along the burgeoning Cotai Strip.
Venetian Macau, City of Dreams and other mega-resorts will bring greater entertainment, retail, dining and other non-gaming draws to Macau, drawing a new breed of visitor to the city. Mr Chan believes this, along with the big growth in the size of China’s middle-class, will raise demand for slots relative to tables, and Mocha will seek to further establish its niche as the only slot-focused venue to capitalise on that market-shift.
The popular Vegas Star
