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| Shaun Rein |
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| Sara Hsu |
Not only commodities like soybeans and caviar can be hit by tariffs in the ongoing trade war, China has many more potential targets, like the US casino's in Macau, says business analyst Shaun Rein, author of The War for China's Wallet: Profiting from the New World Order, at Onlinepoker.net.“It is possible they will ratchet up police surveillance of his [Adelson’s] Macau properties in order to spread fear among high rollers and even middle-class gamblers that they are being checked in on by the authorities. Or they will launch an audit of their books. Either way, a move could be viewed as having plausible deniability that the government cloaks as a crackdown on corruption or tax evasion, as they did against Lotte in China’s battle with South Korea.”More at Onlinepoker.net.
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| Shaun Rein |
Even by Macau’s extravagant standards, this all sounds wildly over the top, but is it perhaps something that the city’s predominantly mainland Chinese visitors are looking for. Shaun Rein, director of China Market Research Group, has his doubts: “Bigger is no longer always better. I think five or 10 years ago, everybody wanted to go to these over-the-top hotels, but what we’re finding right now is that people are looking for a different experience and more boutique-like hotels that have themes.”
Enter The Parisian Macao. Targeted to open in the second half of this year, the US$2.7 billion French-themed resort will be Sands China’s follow-up to its Italian-themed The Venetian Macao that opened in 2007. This second Sands mega-resort will feature 2,950 guest rooms, a casino, meeting and conference spaces, a 300,000-sq ft retail mall resembling Paris’s Avenue des Champs-Élysées and featuring 130 boutiques and more than 10 restaurants, a rooftop terrace and pool resembling the gardens of Versailles, and a half-size replica of the Eiffel Tower with a viewing platform where guests can get a 360-degree view of Cotai...
Not everyone is as confident that business models that were successful in the past will necessarily suit present trends and tastes in Macau. “You can’t just offer predictable formulas right now. You have to think clearly about what the Chinese consumer wants. I find that the casino operators don’t understand the Chinese very well,” Rein says.
“The new luxury in China is not buying Louis Vuitton anymore. It’s about posting on WeChat Moments where you’ve travelled to. That’s the new luxury status. When we interview people, they [say they] like to go to New Zealand, Botswana, South Africa, France or Japan and share their photos. It’s showing their friends that they’re living the good life. It’s not about throwing down a US$1 million bet in Macau anymore.”...
But going beyond the argument of traditional resort formats versus more innovative designs, will either concept be enough to generate more non-gaming revenue and revive Macau’s flagging fortunes?
More in the South China Morning Post.“It’s a tough decision for casino operators,” Rein says. “Should they focus more on hotel, food and entertainment revenue, or do you try to capture back the gambling? That’s why it’s a no-win situation for many of these guys, because they’re going over the top spending all this money, but they can’t generate the revenue back because the reality is the market has just changed.”
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| +Shaun Rein |
China Market Research Group founder Shaun Rein is one of the foremost authorities on mainland consumer tastes and trends. His new book, The End of Copycat China, looks at how Chinese companies have been driven to innovate now that low-hanging fruit of the past two decades has been picked bare. (For those who contend Chinese companies can’t innovate, ever heard of Alibaba?) The book also looks at mainland consumer dynamics helping drive innovation, building on the portrait of consumer trends in Rein’s 2012 book, The End of Cheap China.
“Our research suggests that Macau is a must stop for all Chinese travelers and that outbound Chinese travel will continue to rise 15-to-20% a year for the next five years,” Rein, an American living in China since the 1990s, says. “There are easily 50 million Chinese who could visit Macau this year and be important gamblers.”
Mainland arrivals to Macau last year were 18.6 million, 63.5% of the 29.3 million in total arrivals. Many of those mainland arrivals are the same people making several trips. So by Rein’s reckoning, Macau is capturing a small fraction of the potential players from its key market, including those coveted premier mass tier players and the burgeoning middle class driving outbound growth figures. After a recent visit to Macau, he outlined reasons Macau may be missing out on a large chunk of mainland travelers.
“The casinos need to expand their offerings outside of gambling in order to attract families,” Rein says. “Specifically, casino [resorts] need to cater to women and children with exhibits, dining, amusement parks, shopping so that they can have fun while husbands are gambling. The current offerings targeting children, like those on the Cotai Strip, are not good enough.”
Shopping is one area where Macau remains too male oriented. “The retail component is critical for Macau to remain competitive, but the mix needs to move away from just luxury that targets male consumers and the typical standard brands of Louis Vuitton and Gucci,” Rein says. ”Newer niche brands targeting female consumers like Tory Burch or Michael Kors need to be given better locations to make Macau more appealing to family trips or just-the-girls trips.”
There’s a further female issue where Macau can do better. “The casinos also need to be more friendly when stopping women at entrances,” Rein says. “They are not all hookers.”More in Forbes.
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| +Wei Gu |
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| Ben Cavender |
Las Vegas was very successful in gaining different types of tourists, but Macau is still at the infant stage. Why is it so hard here to diversify the pool of visitors?
You’re looking at Las Vegas as a casino-entertainment-holiday destination, and it’s been that kind of destination for much longer than Macau has. Macau’s history is much shorter, so we’re still at the early stages of development.
Part of the challenge is that in many ways mainland Chinese consumers are very discerning, very demanding in terms of what they get for their money and what their experience is going to be, and so when they look at Macau they’re still seeing a lot of the development happening.
So you’ll see people that are saying: “We’re going to wait a year or two to go, because we hear a new casino is opening and we’re not going to go right now, because we don’t want to stay in an old hotel.” There are a lot of people taking a wait-and-see approach to see what’s happening.
The other problem is that, if you look at Las Vegas, they’ve been able to take their history as a town with organised crime and things like that, and turned that into a positive. They brand the history as being interesting, and people like that.
If you look at Macau, that sort of history doesn’t exist in the same way. People look at it right now and they draw associations to government officials scamming money and going down to gamble.
Part of it is doing a stronger job of looking at Macau’s roots, the Portuguese history, the interesting food and interesting culture, and some of that might get a little bit more attractive to people who are sort of looking for a more cultural destination.
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| Ben Cavender |
An expert on the Chinese market has warned Macau casino operators that they need to rebrand their offering if they wish to retain their status as the region’s number one casino destination. Ben Cavender, associate principal at China Market Research, told attendees at this year’s Global Gaming Expo (G2E) Asia that China’s middle class is starting to view Macau as “an old destination,” leading many of them to feel “they’ve done it already.”
Cavender says the Chinese middle class has a strong cultural awareness, and when they look at the offerings in Singapore, the Philippines and other regional markets, they see “something new and interesting.” Cavender says Macau does a great job catering to VIPs but needs to address the needs of the middle class through more non-gaming options. The new resorts going up on Cotai are a good start, but Cavender says Macau remains “not easy for families, not friendly for casual gamers who sometimes may not be able to find something else to do besides gambling.”More at CalvinAyre.com
