Inside Asian Gaming

MArch 2016 inside asian gaming 11 Cover Story Cruise prices in the mainland start around RMB3,000 (US$460) in low season for a basic package, high by global standards, CLSA says, with better rooms, alcoholic drinks, premium dining and shore excursions available at extra cost. On board, however, the vessels offer an extraordinary range of activities, from 6am dancercise to last dance with a live band pushing 2am. Depending on the ship, passengers can select from a menu that usually includes yoga classes, Sudoku tournaments, Zumba classes, arts and crafts geared to destinations, mahjong, child and youth programs, lucky draws, indoor and outdoor pools, duty free shopping plus live music throughout the day and evening shows in different locations. And, yes, there’s gaming. International cruise ship casinos may have 50 tables and 30 machines on the main floor, plus a VIP club with up to a couple dozen tables and private rooms. That may not be up to Macau or Las Vegas standards, but the customers are leisure travelers who want gaming as part of a broad entertainment menu, the same group Macau is courting as it adds non-gaming attractions. SUBMERGED REVENUE Cruise operators list their casino revenue under onboard revenues, along with payments for alcohol, internet, spa, retail and other passenger spending. Last year, Royal Caribbean’s onboard revenue was typical; 27% of its total cruise revenue (the rest is passenger ticket sales) or US$2.2 billion out of US$8.3 billion. An industry source says perhaps 10% of international carriers’ onboard revenue now comes from gaming, although the proportion is higher in Asia and rising. For Carnival, meanwhile, onboard revenue made up 25% of its US$15.5 billion total cruise revenue. “I think that quietly the big international cruise operators are very happy these days with the revenues from the onboard casinos of cruises originating in mainland China,” Union Gaming’s Mr Govertsen says. “I suspect it is still a very small proportion of revenue, but seems to be growing nicely.” Asia has helped open the eyes of international cruise executives to the revenue potential of their casinos. Carnival, which has cross marketing deals with casinos for some of its brands, says it is instituting a program aimed at expanding casino revenue. Royal Caribbean names expanding Asian casino revenue as a growth driver in last year’s fourth quarter and is working to develop that side of the business. Cruise line executives aren’t the only ones innovating to grow revenue through shipboard gaming. Central Vietnam’s port of Danang announced in January that it would allow visiting cruise ships to keep their casinos open while docked. Only passengers can play, so there’s no loosening of Vietnam’s domestic gaming restrictions. “The goal is simply to get cruise ships to anchor at Danang,” Global Marketing Advisors Partner Andrew Klebanow says. “Every time a ship makes port, it disgorges 2,000 passengers, which has a significant economic impact on the communities surrounding the port. In this situation, some passengers will take a day trip to Hue, others will play a round of golf while others will just go to a beach resort.” Imagine using a casino, even someone else’s casino, to attract visitors for non-gaming activities. Maybe it’ll catch on. Asia has helped open the eyes of international cruise executives to the revenue potential of their casinos.