Muhammad Cohen

Category: Macau Business magazine

  • New mainland visitors invigorate Macau

    Macau’s gaming revenue topped $45 billion last year, about seven times the house take in Las Vegas. But the real excitement is about where visitors are coming from.

    The majority of mainland visitors to Macau, 18.6 million last year, no longer come from immediately neighboring Guangdong province. Travelers from more distant parts of China are arriving in greater numbers. As I wrote in Journey to the South (page 68, payment required), that’s a very welcome development.

    Sources interviewed for the article in the January issue of Macau Business pointed out that these guests, mainly from northern and central China, tend to stay longer and spend more. They’re more likely to treat their trip to Macau as a vacation, or at least an occasion, rather than a surgical strike on baccarat tables.

    Half of the visitors to Macau don’t even stay a night, walking back across the border into Guangdong or taking a ferry back to Hong Kong. Visitors traveling from greater distances are more likely not only to stay in hotels, but take in Macau’s sights, eat in its restaurants, and maybe even sample its small but growing roster of entertainment options beyond the casino floor.

    Even more mainlanders will be heading south with the arrival of Chimelong, a popular mainland theme park operator, on Guangdong’s Hengqin Island, within spitting distance of Macau’s Cotai casino cluster, its version of the Las Vegas Strip. Chimelong’s International Ocean Kingdom, phase one of five resort development plan, opened last week, just in time for the Chinese new year holiday. Analysts at Union Gaming Group estimate Chimelong will attract up to 2 million visitors this year, and Chimelong officials have targeted 20 million annually when it’s complete. China’s official news agency acknowledged many Chimelong guests will cross the bridge to Macau as part of the trip.

    Macau and mainland authorities have long urged Macau to diversify its revenue beyond gaming, hoping that it can someday mirror Las Vegas, where casino resorts record most of their revenue from non-gaming sources, including hotels, shows clubs and restaurants. Visitors from northern and central China nudge Macau’s needle in that direction.

    But it’s a faint shadow of what the authorities wanted when they brought the creators of modern Las Vegas, Wynn Resorts founder Steve Wynn and Las Vegas Sands founder Sheldon Adelson, to Macau. Officials expected they’d transform Macau into an international travel and convention destination. Instead, ten years after Adelson opened Sands Macao to begin Macau’s boom, getting mainland visitors to travel a few hundred miles to get there constitutes cause for celebration.

    Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

  • Macau tests the strength of its brands

    Macau casino owners know how to build fabulous resorts but not necessarily strong brands. Leading casino operators SJM Holdings and Sands China Ltd run their properties under a variety of names, without any unifying theme or brand promise.

    “A brand must offer a consistent brand promise,” Gaming Marketing Advisors principal Andrew Klebanow explains. “It must also offer a clear image in the customer’s mind. By buying a branded product the customer has a high degree of assurance what he/she is buying.” Klebanow cites McDonald’s – “the product will be hot, tasty, served fast and offer good value” – and Hard Rock – “hip environment, rock music and glass showcases filled with rock memorabilia” – as successful brands. Macau casinos, with the exception of Wynn Macau, mainly have property names that have not yet evolved into brands.

    Casino owners hope to change that. Melco Crown Entertainment Ltd will bring its City of Dreams name from Macau to Manila at a new integrated resort expected to open this year. Brand Stand (Macau Business, December 2013, page 64, payment required) looks at the prospects for its success and for brand building in Macau.

    The article also examines the history of the Sands brand. Sands China parent Las Vegas Sands Corp was the last owner of the iconic Sands Hotel and Casino, playground of Hollywood’s legendary Rat Pack and its 1960s successor, The Summit, led by Frank Sinatra, Dean Martin and Sammy Davis Jr. While Sands survived as a corporate name after hotel’s implosion in 1995 and appears on some of the company’s properties, it hasn’t reemerged as a brand.

    Macau companies do have a successful Asian example to follow, Resorts World, part of Malaysia’s Genting Group. In less than five years, Resorts World has become the first truly global casino brand, with outposts in Asia, the US, and Europe, though not Macau. As Macau’s casino companies try to spread their wings in the region, particularly Asian gaming’s great white whale, Japan (Macau Business, October 2013, pg 86), brands will become a bigger factor. Last month, Japan began its long road to casino legalization (Macau Business, January 2014, page 78, payment required), with the outcome still uncertain. Brands provide a comfort level for governments as well as investors. Like customers, brands help them believe they can know in advance what they’ll get from a casino company.

    Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

  • Japan shuffles toward legal casinos

    The land of the rising sun is the land of rising hopes for the world’s casino industry. As I wrote in Whale hunting, Japan style (see page 86), the world’s third largest economy is the last great frontier for gaming, and virtually every casino company in the world wants to be in it. Macau casino companies keep upping the ante, with spending pledges for a Japan project reaching $5 billion.

    The article in the October issue of Macau Business points out there’s already a well-established market for gambling, including pachinko parlors with illegal payoff windows next door, Yakuza-run remote broadcast of live casino games from legal gaming jurisdictions, and the world’s most heavily bet horse racing.

    For years, Japanese politicians have said that it’s time to make casinos legal, most notably Prime Minister Shinzo Abe, who promised to push for casino legalization during his previous, truncated term succeeding Junichiro Koizumi in 2006. Last week, his ruling Liberal Democratic Party (LDP) introduced casino legislation, and the long anticipated bill is widely expected to pass. This time, casinos are packaged as part of Abenomics, the prime minister’s plan to reform Japan’s economy and lift it out of its quarter century long doldrums.

    The draft casino bill outlines a multilayered process for bringing casinos to Japan. The national bureaucracy will draft the rules, while local governments weigh whether they want casinos in their jurisdictions. Against the promise of investment, jobs and (mainly domestic) tourists, there’s the perception of gambling as a seedy activity, embodied by pachinko parlors with their legacy of money laundering, drugs and bribery. Japan’s National Police oppose casino legalization, along with some civic organizations, Buddhist groups and fringe opposition parties.

    Gambling also has a reputation for government boondoggles, embodied in overbuilt publicly funded speedboat race courses and overstaffing at horse tracks. A government sponsored theme park construction initiative, with similar goals to casino development, fizzled into a puddle of wasted public money.

    Mix in Japan’s inherent social conservatism, and, despite politicians’ support, casinos face an uphill fight. The seven year tease for the world’s casino companies may be over soon, or it may have only just begun.

    Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

  • Solaire names Arasi president, as suggested

    On September 12, Solaire Resort and Casino dismissed Las Vegas consultant Global Gaming Asset Management (GGAM) and Solaire’s chief operating officer Michael French, dubbed GGAM’s official representative there. In the October issue of Macau Business (see pages 93-95), I report on the reasons why Solaire’s billionaire owner Enrique Razon Jr fired GGAM.

    I’d visited Solaire as part of researching a Macau Business special report on Philippine gaming (see pages 48-55) published in August. In September, when Razon said he wanted to replace French with an experienced hotel man, I immediately thought of Thomas Arasi, the former president CEO at Marina Bay Sands, one of Singapore’s two integrated resorts (IRs), and a veteran of the hospitality industry. Arasi delivered the most profitable quarter for a property opening in the history of Las Vegas Sands Corporation (LVS) in 2010 then quit in January 2011.

    Two things impressed me most about Arasi. First, during his time at Marina Bay Sands (MBS), he was a great ambassador for his property and the brand: open, forthright and respectable. Nearly a year after he left MBS, Arasi was on a panel of casino executives that I moderated at a conference that happened to be held at MBS. Arasi introduced key ideas that helped the panel stand out. After the panel, he agreed to answer some questions for an article, so I accompanied him to his favorite coffee stand in the vresort.

    As we rode down the long escalators in the MBS convention center, Arasi was greeted warmly by every employee we saw. At the coffee counter, the barista remembered Arasi’s brew right down to the soy milk in his double-shot latte. Navigating MBS with Arasi was like joining a popular politician on a campaign swing. A CEO who made such a lasting impression on frontline workers would be a terrific choice for Solaire, or anywhere, really, I thought.

    So I wrote to Arasi to tell him that I thought he’d be good fit with Solaire and vice versa. Many of the key people at Solaire worked for him at Marina Bay Sands. I also shared some of my perspectives on Solaire and Manila after my first visit there in 15 years:

    [Manila] is an interesting and livable place.. Solaire is a first rate property and has set the bar high for the next three IRs… Entertainment City is going to bring the kind of buzz to Manila that the IRs did in Singapore. But Manila’s eight times bigger, so the impact will be diluted. Still, it’s a happening place.

    I didn’t hear from Arasi before I filed my story. But just before the October issue of Macau Business went to press, news broke that Solaire had named Arasi as its new president and chief operating officer. I then received a pleasant note from Arasi, though no one has offered me a headhunting fee yet. I just hope Arasi’s tenure at Solaire proves as successful as I thought it would be for all sides.

    Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

  • Macau pumps premium

    The hot buzzword in Macau, premium mass market, remains difficult to define. But perhaps more important, the strategy is unproven and the consequences far from certain. That’s hardly the optimal situation when each casino operator is spending billions of dollars on new resorts claiming to target this amorphous market segment.

    In the July issue of Macau Business, I examined reasons behind the rise of the premium segment (see page 66).

    In Asia Times this week, I wrote about contradictions in defining premium customers among resort executives and industry insiders.

    The focus on premium customers, whether it’s a real phenomenon or not, underscores Macau’s continuing move upmarket that includes higher minimum bets at gaming tables and the addition of thousands of five-star hotel rooms, with little new supply in lower price categories.

    Rising minimums mean players that want to bet less than HK$300 (about US$39) per hand must go to a betting terminal rather than a table in most casinos. It’s hard to feel like James Bond sitting at a screen betting units instead of chips and watching your cards or dice in a video window rather than feeling fresh table felt and cold, crisp chips as you go eyeball to eyeball with your adversary. And there’s no place for the Bond girl or guy without annoying the players next to you or in the row(s) of screens behind you.

    With Macau’s constraints on tables and labor, casinos can justify trying to maximize revenue from their limited number of tables. But that’s not necessarily the best strategy to develop Macau as a well-rounded travel destination. With thousands more rooms and a host of new attractions due to open by 2017, Macau may better served by broadening its focus beyond the thin slice of China’s wealthiest.

    The real opportunity lies with China’s fast growing middle class. China Market Research Group (CMR) associate principal Ben Cavender said at Global Gaming Expo (G2E) Asia 2013 in May that China’s international travelers are becoming more numerous, adventurous and demanding.

    These tourists may not see gambling as a primary reason to visit, but one of the many entertainment and leisure options they want to sample. If these visitors, paying top dollar for lodging, don’t feel welcome and respected on Macau’s gaming floors, integrated resorts in Philippines, Cambodia, and, since last month, Vietnam already have the welcome mat for them.

    Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.