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Towering Ambition

Newsdesk by Newsdesk
Mon 11 May 2009 at 16:00
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Marketing Dreams

How will CoD and the newly rebranded Altira Macau work together?

How does MPEL intend to make Altira Macau (the newly rebranded Crown Macau) and Crown Towers a mile or so away at CoD, work together in the VIP market? The answer to that question has been delivered in instalments. The first part came from Greg Hawkins, President of City of Dreams, during the tour of the new Cotai site. The second part came a few days later with the formal announcement that Crown Macau would be rebranded as ‘Altira Macau’.

In response to a query posed by a journalist from BusinessWeek at the end of the CoD tour, Mr Hawkins revealed that at least 60% of Crown (Altira) Macau’s rooms are ‘comped’ as it’s known in the casino trade, i.e., complimentary for VIP players and therefore not directly earning revenue. Mr Hawkins said he couldn’t recall the exact figure of ‘comps’, but if he was willing to concede 60% without consulting the paperwork or his subordinate staff, it’s safe to assume the figure may be even higher.

“Crown Macau [Altira] is only 216 rooms. It has a fairly small room base and fairly large VIP activity. So by the nature of that the large percentage of rooms would be gaming related—without being able to give you a specific number,” he added.

Direct marketing

He also confirmed that the amount of so-called ‘direct play’ (where the operator brings in players by itself, cutting out the middleman agent and his commission) at Crown/Altira was minimal.

“We have a direct business there [Altira] as well. I don’t think we’ve gone public on that type of split, but it’s a small percentage obviously.”

Crucially Mr Hawkins also revealed that Crown Towers would be aiming to draw in more direct VIP players (presumably from outside Mainland China).

“Generally there will be direct VIP business in Crown Towers and more junket VIP business on level two [of City of Dreams’ gaming area]. It’s quite distinct,” stated Mr Hawkins.

MPEL clearly has an incentive to seek a better business model for its VIP business at CoD, given that at Crown/Altira has definitively set out its stall as a high volume, low margin operation relying on volume of roll for a living.

Sources who have seen the Crown Towers VIP gaming rooms, though, say they look to be a copy of those at Altira.

Perfect start

MPEL’s reason for not showing the media its VIP gaming areas in Crown Towers at CoD wasn’t revealed. The company must obviously be concerned, though, to get the presentation of the property absolutely right before unveiling it to the market, given that Crown Towers is likely to face stiff competition from LVS at the nearby Four Seasons and at Paiza.

Morgan Stanley Research Asia/Pacific—in a recently published market outlook report on Macau titled Macau Gaming & Property–Turning the Corner—says as much.

“Opening of ‘City of Dreams’ could intensify competition: We believe CoD will drive [Macau] visitor arrivals up; however, it will also compete fiercely with Venetian for the mass and VIP share coming to [The] Cotai Strip. This could result in bigger discounts and narrower margins in the interim for both operations,” stated the analysts in the report.

“We expect CoD and GMR [Galaxy Macau Resort] to deliver lower returns on investment than peers, such as Sands and Venetian, as the market matures and revenue growth slows down,” adds the report.

Any cap on VIP agents’ commissions, whether introduced on a nominally voluntary basis by the Macau government, or by mutual agreement between the operators following their recent talks via the forum of the Macau Gaming Operators’ Association, could be more of a threat to Amax’s business at Altira, than it would be to Crown Towers’ high roller business if MPEL can deliver on its promise of bringing in more direct players.

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Newsdesk

The IAG Newsdesk team comprises some of the most experienced journalists in the Asian gaming industry. Offering a broad range of expertise, their decades of combined know-how spans multiple countries across a variety of topics.

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