China’s Year of the Earth Ox (Jan. 26, 2009, to Feb. 13, 2010) is expected to be a tough year for the global gaming industry. Gloomy economic news comes from all over the world. A deep recession has been predicted by many economists. Some have expected recovery in the United States to start in the second half of 2009. And skeptics say it will probably take a few more years before Las Vegas will fully come back to life.
Asia has been hit hard as well in this global crisis, although not as badly as Europe and America. Asia’s tourist numbers are expected to fall significantly in the current environment. Everyone is tightening their proverbial belts.
In Singapore, the casino gaming industry has barely started. Its two integrated resorts, Marina Bay Sands and Resort World at Sentosa, are expected to open in late 2009 and 2010, respectively. Both will be allowed to operate physically small, but financially significant, casino gaming facilities. They will most likely open in stages, with each one’s casino section bringing in much-needed revenue in the earliest stage. Some observers are wondering whether these integrated resorts will survive a less-than-conducive environment when they open. Without a doubt, the Year of the Earth Ox will provide a glimpse of just how one resort, Marina Bay Sands, will fare in such an environment. As a Singaporean, I am secretly confident.
Marina Bay Sands, the first of the integrated resorts to open, has been much talked about in Singapore. It will bring Las Vegas-style entertainment unlike anything that Singaporeans have seen before. Marina Bay Sands is expected to open with 1,000 gaming tables and will target Asian’s lucrative MICE (meetings, incentives, conferences and exhibitions) market in its non-gaming business pursuits. Even as local banks are retrenching, Sands executives are positive about their business prospect, at least in the long term.
By comparison, Resort World at Sentosa, operated by Genting Group, is more “ordinary.” Singaporeans have been flocking to Genting Highland and its casino in nearby Malaysia for many decades now. Genting Group also owns Star Cruises, which operates popular passenger cruise ships (with onboard casinos) docked at the Singapore Cruise Centre.
So while most Singaporeans are positively familiar with the Genting brand, they are excited about the Las Vegas import. Actually, Marina Bay Sands is not all that unfamiliar to the ordinary Singaporean. Local media have extensively covered the opening of the Sands and Venetian in Macau. Moreover, many eager Singaporeans (and gamblers) have already ventured to Macau, thanks to local budget airline Tiger Airways. In return, Chinese residents living in Hong Kong and Zhuhai (a Chinese city neighboring Macau) have also made use of cheap Tiger Airways flights to go to Singapore for work and holidays.
Tiger Airways is a low-cost carrier that is partially owned by Singapore Airlines. In the last few years, it has helped to contribute to the phenomenal growth of Southeast Asian visitors to Macau. Tiger Airways operates from Singapore to many major cities in Southeast Asia, like Manila, Bangkok and Kuala Lumpur. To tap the China market, Tiger Airways also covers Guangzhou, Shenzhen and Macau. A daily flight is available to and from Guangzhou at RMB221 (about U.S. $30) one-way. The vast Chinese tourism and gaming markets are within a few hours flight from Singapore at a price that is affordable to many mainland Chinese.
In a country that is 24 times bigger than Macau and has nine times the population, Singapore is known for its foreigner-friendly environment. In 2007, it welcomed more than 10 million visitors (mostly by air) from Indonesia, China, Australia, India, Malaysia, etc. On average, these visitors stayed for 3.6 days, three times longer than the average Macau visitor. From January to October 2008, 35 percent of all visitors to Singapore came from Southeast Asia and 25 percent came from northern Asia (namely, China, Hong Kong, Japan and South Korea). Singapore’s relatively easy and low-cost accessibility by air (from regional Asian countries) will certainly ensure a steady supply of patrons to its new integrated resorts, at least when the global crisis stabilizes and people start spending again.
Other forms of gaming have existed in Singapore for many years, including lottery, sports betting, horse racing and casinos onboard cruise ships. Lottery betting in Singapore was legalized in 1968, and horserace betting has also been available for many decades. Many Singaporeans are active buyers of lottery games like Toto and 4D. Long queues for 4D tickets outside ticketing outlets can be seen every Saturday and Sunday. The Singapore Cruise Centre, which houses Star Cruises, handles about 9 million passengers every year. Many of them are locals. On cruise ships operated by Star Cruises, passengers wager in on-board casinos in international waters. The gaming needs of ordinary Singaporeans are also met by taking a cheap bus trip to the aforementioned Genting Highland in Malaysia. A weekend of casino entertainment in Genting is always an easy option.
As each integrated resort has its own offerings combining gaming with non-gaming, each also has its own advantages and unique market positioning. The location of Marina Bay Sands is perfect, a gift from Mr. Sheldon Adelson. It is situated near the financial and banking district of Singapore, which itself is a reputable regional financial center. All major global banks have a presence in this part of downtown Singapore, including Goldman Sachs, Bank of America, JP Morgan Chase, Citibank, Deutsche Bank, HSBC, and CSFB. All will now be but a stone’s throw from the Marina Bay Sands—imagine a casino near Wall Street! The casino’s brokers would service their bank clients, treating them to luxury nights of entertainment and gaming. At a higher level of the business value chain, rich Southeast Asians would occupy the VIP rooms. Meanwhile, MICE business executives, tourists and some local residents may stop over and indulge in a little fun and entertainment.
Resort World at Sentosa will likely have a different make-up of visitors. Sentosa is an entertainment-themed island resort catering to many local residents and overseas tourists. It is much more in line with the tourist nature of Vegas. It is more casual and less serious than downtown Singapore. It is all about lifestyle, space and relaxation. Sentosa is a favorite spot for young Singaporeans, families and beach parties. Demand is also likely to be more seasonal at this Resort World location, and the mass gaming segment will play a more important role.
The unique characteristics of each of these casino’s patrons have significant implications to each casino and the management of the facilities. For example, in Marina Bay Sands, there is an opportunity to develop a sustainable premium segment of business executives and high-value yuppies. Even responsible gaming measures need to cater to the differences between the two resorts. At Resort World, there is a need to implement added measures to prevent young, underage Singaporeans from entering the gaming floor. Family-based casino exclusion may be also more appropriate here.
In Marina Bay Sands, on the other hand, responsible gaming programs that target executives at workplaces may be needed. Differentiation is the key to sustainability in the two integrated resorts, as is differentiation from each other and from other gaming venues across Asia. Probably, and somewhat contrary to popular belief, not all Singaporeans are Chinese, nor are they the same. Although about 75 percent of Singaporeans are ethnically Chinese, demographic specialization will be needed. While certain values are common (i.e., the influence of Confucianism), others are not, including cultural influences from the Malays, Indonesians and Indians. Any product offerings will need to take into consideration a broad, multicultural group of customers.
One thing is for sure, though: The attentions of Asia, especially the governments of Japan, Taiwan and South Korea, will be focused on Singapore’s upcoming “little” experiments.
Desmond Lam is a visiting senior research fellow at the School of Marketing/Ehrenberg-Bass Institute for Marketing Science, University of South Australia. He was formerly an assistant professor of marketing at the University of Macau. He can be reached at desmondL@hotmail.com.
Comments
Post new comment