3 Editor and Publisher Kareem Jalal Director João Costeira Varela Business Development Manager Ricardo Carvalho Operations Manager Artur Sousa Contributors David Green, Karen Tang, Steve Karoul Photography Ike Graphic Designers Ricardo Borges Karen Yiu Editorial Inside Asian Gaming is published by Must Read Publications Ltd Rua de S. Domingos, nr 16-i, Ed.“Hin Lei”7A - Macau Tel: (853) 6646 0795 For subscription enquiries, please email
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[email protected] or call Ricardo Carvalho Tel: (853) 6682 8475 www.asgam.com According to a survey by the American Gaming Association, twice as many Americans now say the overall “casino experience”— the food, shows, other entertainment and shopping — is more fun than the actual gambling in the country’s increasingly expansive casino resorts. Over half the revenue of Las Vegas Strip casino resorts is now derived from non-gaming sources. The emphasis on non-gaming attractions has helped to improve the American public’s perception of the gambling industry, with 82% of Americans surveyed now saying that casinos are an acceptable form of entertainment for themselves or anyone else. The dawn of the mega-resorts will likewise improve the image of Macau’s casinos, transforming the city from seedy day-trip gam- bling getaway to complete leisure and business tourism destina- tion. Still, non-gaming draws are having a hard time taking off in Macau. Tentative attempts at introducing fine-dining have met with a luke- warm response.The theatre at the popular Sands Macau casino has yet to stage a performance, while the Tryst nightclub at Wynn Macau was recently shut for lack of demand from Chinese gamblers, for whom the baccarat tables hold much greater allure. “The night-time venue did not work as we expected,”Grant Bowie, president of Wynn Macau told the Macau Daily Business Blog .“This is part of a continued experiment, and [Steve] Wynn’s approach is to do different things to enliven the place and create a new environment.” The Tryst will be turned into a private gaming area, just as some of Sands Macau’s fine-dining establishments were scaled back to make way for more tables. Of course, the experiment is far from over, and it may be that other forms of entertainment can work in Macau, though for now, the ex- cessively high returns derived from putting in more gambling tables has held back investment in other areas. Other operators are also reluctant to continue the experiment, given the initial results. MGM Grand Macau is scheduled to open in Decem- ber, but MGM Mirage International President and CEO Bob Moon said his company is taking a “wait-and-see” approach to nightclubs.“We have not decided what we will initially do in regards to the nightclub venues,”Mr Moon said“You could spend a lot of capital to build something just to tear it out.We would prefer to evaluate what is right for the market.” The only non-gaming draw that has thus far offered a healthy return on investment for Macau casino operators is retail.The 12 stores at Wynn Macau’s mall are setting records for highest sales per square Retail Therapy foot across Asia. Morgan Parker, president of mall developer Taub- man Asia, interviewed in The Casino Retail Story on page 4, concedes it will take time to build Macau’s image as a shopping paradise, but there is clearly potential for Macau to take over from Hong Kong as the preferred shopping destination for mainland Chinese travelers. The amount of retail space in Macau is set to explode from a mere 330,000 square feet on the Macau peninsula and Taipa today, to six million sq. ft before the end of the decade, according to research by Taubman.The Venetian Macau resort will open in July, and its mall, combined with the adjacent Four Seasons mall, will be bigger than the four major shopping malls of Hong Kong combined.Taubman, for its part, will develop the retail portion of the mammoth Macao Studio City project. While other non-gaming draws have not met with early success in Macau, if Vegas is any guide, they will ultimately garner a greater share of overall revenue. Although visitors to Macau and Vegas are different in many respects, they do also share some remarkable similarities, as discussed by PricewaterhouseCoopers’ David Green in The West Side Visitor on page 26. CLSA’s Aaron Fischer explains that while “Macau’s current revenue mix is similar to that of Las Vegas in the 1960s, when the emphasis was also on gaming,” there is potential for non-gaming revenues in Macau to rise from the current 5-10% of the total to at least 25% by 2010. Also in this issue of Inside Asian Gaming , we feature our pick for one of the most innovative gaming products to appear in Macau, the LIVE Baccarat system. As innovative as the technology offering is the developer’s securing of a profit sharing agreement with Macau casino operators, as detailed in Sharing is Winning on page 16. The May 1st Labour Day march in Macau once again resulted in violence, suggesting the fruits of the city’s breakneck economic development are not evenly distributed. Macau is now virtually at full-employment, but discontent over rising rents and other costs is simmering, especially since salary raises have been largely focused on the gaming sector. Given Macau’s acute labour crunch, recruiting top talent to staff the city’s increasingly lavish casino resorts has become a difficult task, and HR outsourcing could be the answer, as highlighted in In-De- mand Talent on page 20. Kareem Jalal We crave your feedback. Please send your comments to
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