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Macau's Great Gamble 19832 mw Exec_Report Jul_07 16/7/07 14:03 Page 5 Executive Report – July 2007 Macau’s great gamble Across the Far East casinos are coming in from the cold as gaming becomes a truly global mainstream leisure activity. Singapore has lifted its decades-old ban, South Korea’s casino industry is expanding rapidly and both Taiwan and Japan are considering legalisation. Macau is the glittering jewel in Asia’s gaming Fresh light affluent provinces, with over 90 million crown. The Chinese owned peninsula has When it comes to the attitudes and people living within a four hour drive of the now overtaken the Las Vegas Strip intentions of mass market Chinese gaming tables. to become the world’s largest gaming customers, Macau’s casino operators have so market with revenues of US$7 billion, and far remained largely in the dark. While many inhabitants of the southern is expected to be worth up to US$13 billion mainland remain poor, the Chinese love by 2010.1 Deloitte is now able to throw fresh light on of gambling, a rapidly growing middle these questions with the results of its unique class and improving road infrastructure Mass market thrust survey of potential casino visitors from should result in a steadily increasing target Macau’s meteoric growth has so far been Mainland China – as far as we are aware the audience. (see Chart 1 below) driven by high-rolling VIP gamblers. only research carried out so far into the However the thrust of future investment will attitudes of the Chinese mass market.3 Deloitte’s analysis indicates that the be the construction of a ‘mass market’ for number of people who can afford a trip to gaming, in which the casino experience will Stratospheric growth Macau’s casinos could grow around 55% be a central attraction within integrated The potential growth in future demand is by 2010. The Macau Government itself is resorts at a major global tourist destination. nothing short of stratospheric. Macau’s key forecasting 42 million visitors by the end catchment area is southern China, of the decade, compared to 22 million in Operators aim to draw the majority of these incorporating some of the country’s most 2006.4 new customers from the emerging middle class in Mainland China,2 for whom Macau Chart 1 – Catchment areas within 4 to 8 hours drive is the only Chinese territory where gambling is legal. An easing of travel restrictions has opened the door to Macau for millions of Mainland Chinese. Jiangxi Total Province Huhan Province population However, at the heart of this mass market 188m strategy lies a great gamble. Operators are Fujian building the new facilities, but will the Province Chinese arrive in sufficient numbers and spend enough money to justify investment 8 hour Guangdong on such a scale? Guangxi Province Province 4 hour What kind of experiences will attract mass market visitors and what will persuade Total Macau them to stay longer? Will they respond in a population similar way to Las Vegas customers, or are 91m cultural differences fundamentally important? 5 19832 mw Exec_Report Jul_07 16/7/07 14:03 Page 6 Executive Report – July 2007 inclusion of ‘beginners’ zones’, recently Chart 2 – Average bet per hand of survey respondents successful in attracting inexperienced No. of interviewed visitors customers in European markets. 250 Slots for success 200 The survey shows that inexperienced mass market customers show a particular interest 150 in slot machines, which traditionally have had a low acceptance rate in Asian gaming 100 markets. 50 The new electronic terminals used by the fast-growing Chinese lottery are increasingly 0 widespread in Mainland China, and are <65 66-130 131-260 >260 likely to encourage the attraction of slot US$ Sample size: 316 machines in casinos. Greater provision of slots appears to be a How many of these visitors will pour into Absolute beginners key factor likely to win over inexperienced the new casinos? Does the Chinese mass So how can operators turn this vast pool of gamblers, particularly women. While market show sufficient interest in gaming to potential demand into a steady stream of Baccarat is currently the overwhelming justify the lofty ambitions of Macau’s foreign actual visitors? favourite game in Macau, Blackjack is the investors? clear favourite casino game amongst men in Despite the widespread enjoyment of our survey. (see Chart 3 below) Untapped market gambling amongst the Mainland Chinese, Our survey reveals that two thirds of lack of casino gaming knowledge appears The evident popularity of slots appears to Chinese respondents have not previously to be a key impediment for many potential justify current projections for the escalation gambled in a casino. However, over 40% of punters. About 40% of the respondents of machines in Macau from around 5,000 in this huge untapped market is interested in with previous gambling experience and 2006 to a possible 18,000 by the end of the doing so in the future. about 90% without previous gambling decade.6 experience, show an interest in learning Large-scale demand clearly exists in volume how to play casino games. Interestingly, Overall, Chinese men show more interest terms, but once through the casino door, demand for Baccarat training, which is one than women in gambling. However, Chinese how much are these mass market customers of the easiest games, ranked first after men tend to be more concerned with prepared to spend? Black-jack for both experienced and novice ethical, family and legal issues associated players. with gambling than Chinese women, The data suggests that over three-quarters suggesting that many will need reassurance of Chinese mass market visitors are likely to Increasing the accessibility of games and that Macau’s reputation as a vice den and spend under US$65 (RMB 500) per hand on provision of training are likely to attract novice centre of criminal activity is a thing of average, with only a small proportion gamblers. Operators may wish to consider the the past. betting over US$260 (RMB 2,000) per hand. To put this into context many of Chart 3 – Stated favourite games of surveyed mass market players Macau’s VIP gaming tables currently impose a minimum bet of US$1,300 (RMB 10,000) % per hand. (see Chart 2 above) 60 Our analysis of survey responses suggests a 50 probable average casino win for mass market players of between US$90-150 per 40 person, versus an estimated Las Vegas (Clark County) average win of US$275 30 across the whole market5. Although this seems relatively modest, the huge potential volume of players should ensure 20 that the mass market becomes an extremely important source of revenue for Macau. 10 Chinese gamblers may spend less than their 0 US counterparts, but the data suggests they Slot Blackjack Bingo Baccarat Craps Roulette 3 card Caribbean Keno are prepared to wager a higher percentage machines poker poker of their income and gamble more Female Male Sample size: 376 intensively. 6 19832 mw Exec_Report Jul_07 16/7/07 14:03 Page 7 Executive Report – July 2007 as likely to enjoy a round of arcade games Chart 4 – What encourages survey respondents to stay longer? as men. % of interviewed visitors 30 Carnival atmosphere The majority of survey respondents are 25 willing to stay in Macau for one or two days and gamble in a casino for up to five hours. 20 A major challenge for operators is to convert a significant proportion of these short-stay 15 day trippers into longer stay visitors. 10 The anticipated growth in visitors arriving by air from other major cities in China will also 5 swell demand for a wide range of leisure experiences. 0 Good More outlet More Shows More cheap More deluxe More Again our survey underlines the importance cuisine stores shopping malls hotels hotels gambling of gourmet cuisine as the overriding factor likely to encourage a longer duration visit to Female Male Sample size: 363 Macau amongst both sexes, followed by luxury and discount shopping facilities, amongst women in particular. Chart 5 – Type of performance preferred 500 Entertainment will be a crucial part of the 450 Macau mix. The survey suggests that Chinese tastes are more similar to those of 400 the Las Vegas audience than many have 350 previously assumed. 300 Importing the Las Vegas experience into 250 Macau is likely to be a recipe for success. 200 However, an understanding of where Chinese tastes do appear to differ could be 150 an important extra ingredient. 100 The survey suggests that musicals and 50 superstar concerts are most likely to attract 0 Chinese mass market visitors, known for Musicals Carnival Superstar Opera Big dancing Circus Acrobatics their passionate love of singing. The survey singing show also indicated that between US$13-65 Sample size: 1,199 (RMB 100-500) appears to be the accepted price range for shows. Over 85% of total Food for thought Deloitte’s survey reveals that the way to the respondents would pay US$65 (RMB 500) or Of course, gaming is only part of the heart of the Chinese mass market is through less for a performance ticket. The vibrant, picture. Courting the Chinese mass market its stomach, with the largest percentages of colourful and frenetic atmosphere of the also means getting the overall product mix both men and women selecting restaurants carnival also has an extremely strong appeal right to provide a genuinely holistic leisure as the most important facility influencing to mainland tourists. (see Chart 5 above) experience. their decision to visit Macau. (see Chart 4 above) However, the large-scale dance and circus- This is the key to driving extended stays and style extravaganzas such as Cirque Du Soleil, repeat visits, and has been critical to the Retail therapy popular in western gaming resorts, do not success of Las Vegas casino resorts where Shopping is rated as a major priority especially appear to have the same resonance with up to half of revenues can be generated by by women, many of whom seek retail outlets Chinese visitors.
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