Muhammad Cohen

Category: Macau casinos

  • 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.

  • Macau raises the stakes

    Table minimums have risen in Macau. That’s the most noticeable change during a two week visit, covering Global Gaming Expo (G2E) Asia for Macau Business and Asia Times and surveying casino floors.

    At most large casinos, it’s virtually impossible to find a HK$100 (US$13) table for baccarat, Macau’s favorite game, or blackjack. Minimums run HK$300 and up in most cases, with HK$1,000 and HK$2,000 tables quite prominent. Baccarat players looking for lower stakes are being pushed to electronic gaming terminals with live or video dealers. Or they can choose roulette or dice tables (sic bo or craps), where at most venues they can still toss a HK$50 or even HK$25 bet on a number, though the main plays are least HK$100.

    The higher minimum trend prevails in both downtown Macau (aka the peninsula) and on the Cotai Strip. Some of the smaller joints on the peninsula have proportionally more HK$100 play, strictly as a function of having fewer tables. Grand Lisboa has a string of HK$100 tables that also accept Macau patacas (MOP) in one section of its ground level, near the escalators leading to the main gaming floor.

    Higher table limits are one factor in the rise of what’s being called the premium mass market in Macau. These are high spending players below the VIP level, and this segment came to the fore as VIP play stagnated during the past year, before staging a recovery in recent months. In March, monthly gross gaming revenue reached MOP31.3 billion (US$3.9 billion), its first month topping MOP30 billion. A MOP40 billion month (see page 60) is on the horizon, though still a ways away.

    Premium mass market and VIP play are both crucial to gaming revenue, but premium mass is more appealing to casino operators for a number of reasons, so they’ll keep focused on it, no matter what happens with VIP play. Watch Macau Business for my upcoming article on this key market segment.

    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.

  • Casino billionaires risk all in brawl

    When elephants fight, the grass gets trampled, according to an Asian proverb. Most animals know how far to take a confrontation without lasting consequences, but occasionally, one or both elephants gets gored.

    For more than a year, Wynn Resorts chairman and CEO Steve Wynn and Kazuo Okada, his one-time largest shareholder and key financier, have dueled publicly. Last week, Wynn shareholders voted to remove Okada from the company board of directors, a day after Okada, the chairman of Japan’s largest pachinko machine maker, resigned amid leveling a blistering attack on Wynn.

    Behind the boardroom drama, billionaire casino developers Wynn and Okada have traded allegations of numerous shady dealings in Macau and Manila. Bribery accusations, in dollar amounts ranging from the hundreds to the hundreds of millions, figure prominently in their charges. As I wrote in Asia Times, inviting regulators to scrutinize the casino business is a risky bet. That’s especially true in this confrontation, where neither elephant seems inclined to back off.

    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.

  • Hangover awaits Macau after 2012 feast

    Macau celebrated the new year in style. On the first working day of 2013, Macau announced casino revenue for December reached 28.2 billion Macau patacas (MOP; US$3.5 billion), a new record, topping the MOP27.7 billion reached in October last year. December registered 19.6 percent year-on-year revenue growth, the biggest increase since April.

    For 2012 overall, gaming revenue topped MOP304.1 billion, or US$38 billion, growing 13.5 percent from 2011 to set another new record. All this in a year when the traditional growth engine of high roller VIP play sputtered, the long awaited opening of Sands Cotai Central in two star-studded phases in didn’t pack much sizzle, and tourist arrivals barely grew.

    The situation is reminiscent of 2008 when mainland officials first tightened the reins on travel to the Macau, inducing panic and even talk of bankruptcy among casino operators, yet revenues grew 31 percent, topping MOP100 billion for the first time. When licensees gathered for a trade council meeting, one mogul reportedly declared, “Thank God for bad years.”

    This year may not deliver such a happy ending. There won’t be any major resort openings during 2013 (nor, in all likelihood, 2014). Macau’s critical transition to mass market focus is still in its early stages. Vacationers who’ve come once must be convinced to lavish their limited leisure budgets and time again on return trips. That’s a growing challenge as Chinese travelers spread the wings further afield and more Asian destinations add casinos to their list of attractions. Moreover, Macau remains almost completely reliant on mainland and Hong Kong visitors and has failed to blossom in the broader international tourism market.

    This year’s completion of Beijing’s leadership transition could mean tighter controls on money moving across the border into Macau as part of broader crackdown on corruption. However, VIP volume has staged a mild recovery since November as uncertainty over the potential impact of the Xi Jinping regime gives way to the reality of the new team moving into place. That trend could continue as the year progresses.

    Opening of the high speed rail line from Beijing late last year, with an intercity link that drops passengers within yards of the Zhuhai side of the Macau border gate, could boost visitor arrivals. So could operation of a new 24 hour border crossing that’s awaiting approval from Beijing.

    But even if more visitors can come, Macau has to do better at giving them reasons to visit. Many of the pieces are already there. Now it’s about assembling them properly, filling in the gaps, and perhaps the greatest challenge, providing the human software to support the billions of dollars in hardware.

    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.

  • Signs of getting it right in Macau

    Club Cubic was heaving at 1.30am on the last Thursday night in November. Nearly 3,000 of the Pearl River Delta’s most beautiful people gathered on the second level of the City of Dreams resort, a space that in the past has often felt as desolate and forbidding as a New York City subway station during the wee hours. On that night, Psy, the Korean rapper behind the mega-hit Gangnam Style, was in town and Club Cubic was the place to be. Sometime past 2am, Psy took the stage, gave the crowd his song and his horse dance and galloped off, but the party continued. It was a night to remember in Macau.

    During a ten day visit culminating with the late night Psy-ting, there were clear signs that Macau is creating more nights to remember for visitors from China’s growing middle class that are presently driving casinos revenue growth. For more than a year, expansion of mass market gaming has outstripped VIP growth.

    According to participants at last month’s Asian Gaming and Hospitality’s Congress, mass market growth reflects Macau and mainland authorities’ push to diversify the economy away from gambling toward broader tourism and leisure activities, as I wrote in the December issue of Macau Business. Junket business insiders at the conference also offered examples of Beijing’s efforts to curtail VIP play. Whatever the reason, mass market spending is rising in Macau.

    On this visit, it seemed Macau’s casinos resorts had sharpened their game as tourist destinations, getting things right more often than has been their custom. Maybe it was my imagination due to spending hours on massage tables and in whirlpools to research an article on luxury spas for the January edition of Macau Business, and enjoying five-star hospitality at their host hotels. Maybe it’s because resorts that needed to learn have had great examples to follow, such as the intelligent, comfortable room design and equipment at Grand Lisboa and the right resort elements for Asia at Galaxy Macau. But mostly, it may be that resorts, especially the ones in Cotai with huge footprints, need to have more traffic and paying customers to function and feel right. As mass market tourism grows, and more people shop, eat and play in plain sight rather than behind VIP room walls, it’s happening.

    Now Macau needs to take the next step and give tourists who come for a good time reasons to stay for more than a day and keep coming back. Sure, gambling will continue to be part of the mix, but there needs to be more. Psy’s appearance underlined the thirst for entertainment. The Pearl River Delta is looking for a good time, and Macau seems finally to have figured out how to deliver one. Now let the good times roll.

    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.