Inside Asian Gaming

June 2016 inside asian gaming 19 In Focus A government consultation paper released the following week states, “Currently, gaming has exerted too much influence on the tourism branding of Macau … Macau has the potential to exhibit an impressive image by reconciling its resort facilities, MICE, arts, and festival events all into one integrated brand.” Although some Macau operators complain that government authorities are pushing them where customers don’t want to go, the market seems to be signaling for Macau IRs to adapt. “We’re already starting to see people’s reasons for coming to Macau change,” Galaxy Entertainment Group Chief Marketing Officer Kevin Clayton says. “People are looking to come to a resort.” For now, at least, Macau isn’t delivering what they want. Year on year gaming revenue declined for a 24th consecutive month in May and is down 12% so far this year, following a 34% decrease in 2014. Visitor arrivals are falling, and visitor spending is falling faster. Hotel occupancy and room rates are declining. In the face of those numbers following the openings of Galaxy Phase 2 and Melco Crown’s Studio City last year, the “build it and they will come” strategy is a shambles. Yet building is precisely what Macau is doing, with four new IRs due to open within the next 24 months. That’s the good news and the bad news: bad because new resorts will further divide a stagnant market; good because they give Macau a chance to create innovative properties that can spark a turnaround. At G2E Asia, industry experts offered visions of how IRs in Macau and beyond can broaden their appeal and enhance customer satisfaction in these rapidly changing times. HAIL CAESARS The integrated resort has evolved over 70 years, combining gaming and entertainment into a package that, when done right, exceeds the sum of its parts for the customer and the operator. Early prototypes include Caesars Palace, which turns 50 in August, Sun City in South Africa and Atlantis in the Bahamas. The concept was further refined with the Las Vegas openings of Mirage in 1989, Bellagio in 1998 and the Venetian in 1999. The Innovation Group Chairman and CEO Steve Rittvo pegs Sands Expo and Convention Center in 1990 as starting today’s IR evolutionary chain. MICE was great leap forward that created IR 1.0, he believes, regardless of whether the convention facility preceded the resort, as in the case of Venetian, which came nearly a decade after its convention center, or as with Mandalay Bay Although some Macau operators complain that government authorities are pushing them where customers don’t want go, the market seems to be signaling for Macau IRs to adapt. Chairman and CEO of The Innovation Group Mr Steven Rittvo which became “a truly different property” once its convention center opened in 2003. An urban planner by academic training, Mr Rittvo explains that the next step in the evolution of integrated resorts, IR 2.0, was explicitly focused on MICE and VIP gamers as primary revenue drivers. The Venetian Macao and its Sands Cotai satellites as well as Marina Bay Sands in Singapore are the best examples. Like their predecessors, IR 2.0 properties are located in or near urban areas that can support the convention component. IR 3.0 remains gaming driven, but caters to different customers – premium mass gamers and tourists – with a wider range of amenities aiming to increase non-gaming revenue, Mr Rittvo says. These resorts are also located in or near major cities and exemplified by Studio City in Cotai, Manila’s Entertainment City resorts and Mohegan Sun’s proposed Inspire resort on the outskirts of South Korea’s gateway international airport, well connected to capital city Seoul. They feature leisure components such as amusement areas and performance venues, with gaming a small part of the total property footprint. Galaxy Macau’s second phase, expanding the resort deck into a water park and adding a retail mall plus Broadway