Ted Chan—Melco Crown Entertainment Co-Chief Operating Officer, Gaming—believes the company’s strengths in innovation and familiarity with its customers will help it stake a greater claim on Macau’s burgeoning mass marketMonday, 09 May 2011
Lawrence Ho and James Packer are the youngest heads of a Macau casino concessionaire. Even when their ages (34 and 43 respectively) are combined, the number still comes to less than the individual ages of two other gaming concession heads (Dr Stanley Ho and Dr Lui Chi Woo) and is tied with a third (Sheldon Adelson). Melco Crown Entertainment’s youth makes it innovative, according to 39-year-old Ted Chan, the company’s Co-COO, Gaming. “We are a very young company with young management. One of the characteristics of young people is we are not afraid to try new things.”
Mr Chan was appointed to his current position in August last year, as part of Melco Crown Entertainment’s adoption of an innovative management structure. Rather than having a head at each of the company’s individual properties, two Co-COOs are given responsibility for group functions over all the company’s properties. Following the resignation of Greg Hawkins as President of Melco Crown Entertainment’s flagship City of Dreams on Cotai, Mr Chan was appointed head of gaming encompassing City of Dreams, Altira Macau and the Mocha Clubs slot venues, while Nick Naples was appointed Co-COO, Operations, with responsibility for all nongaming operations across the group.
Mr Chan comments that although such a management structure may not be appropriate for all markets, in booming Macau it makes absolute sense. “If you would like to capture and leverage the growth of this gaming market, and at the same time you’d like to deliver the best service to the right customer, I think it will be a better idea to let me, as the head of a gaming organisation, focus my job on riding the tide of the [gaming] market. At the same time, my partner, Nick Naples [Co-COO, Operations] will help us make sure our service and hardware is delivered to the highest quality. That’s unique to this organisation.
“One should never say which organisation or management style is best. You cannot apply one management style to every organisation in the world. But I think it works best for this company, particularly at this time of the development of the market.” Although heading gaming over multiple properties does have its challenges, Mr Chan points out the new organization structure makes it easier “to ensure our management philosophy cascades down the right channels to reach all levels.” He adds: “If it’s centralised and each function managed by one team, rather than a couple of teams, it’s more effective, not just in terms of saving costs, but also in terms of productivity.”
Familiarity breeds revenue
“The young and innovative culture of this company is bolstered by our understanding of the customer,” claims Mr Chan. “Because Lawrence Ho and the team are actually Chinese and we grew up in this part of the world, we feel we understand the behaviour of customers here better than anybody else.
“For example, if someone from China comes into your property, [even] if you didn’t grow up in this part of the world and study the culture in China, you might be able to recognise that person comes from northern China, and from that conclude they like spicy food. But then what’s the difference between this guy and somebody from Thailand?”
Mr Chan points out Melco Crown Entertainment constantly strives to learn more about its customers. “For any strategy setup or marketing initiative, the number one goal is to know your customer. So we spend quite a lot of time understanding customer behaviour.
“We have a database of 600,000 members. We do a lot of data mining exercises to find out who are the best customers, the middle customers, and smaller customers, who we put into different tiers so we’ll be able to align the right service to the right type of customer. That enables us to increase the loyalty level of the customer. We’d like to do this with slots and tables, but with slots it’s easier because slot players are used to member cards, and you can track the record of every wager they do. But with table players it’s difficult. There’s no system that offers 100% accurate tracking of table players.”
New gaming concepts
The two latest gaming initiatives from City of Dreams, based on its core values of innovation and knowing its customers, are the ‘Red Hot Tables’ concept for baccarat players and the ‘New Game Zone’ for slot players.
Red Hot Tables incorporate the world’s first baccarat trend indicator, where LED lights surrounding the baccarat displays light up yellow once a run of three winning banker or player hands has been recorded, orange once the run is extended to four hands, and red once the run reaches five hands or more. This system, installed over 220 baccarat tables at City of Dreams, allows players to spot tables with streaks of banker/player wins at a distance.
Mr Chan explains this helps mass market customers, particularly those who are fairly new to baccarat, find a table they may want to bet at. “In the past, when a mainstream player goes to a casino with ten tables, from any spot they can check out the table results and see where they want to go and wager a little bit. But now, when they come to a casino with 100 or 200 tables, it’s too large to do that. So which table should they pick? When the Red Hot Tables indicator lights up at one of the tables, it could help them to pick ‘that one. I’ll go there.’
“So that’s the whole concept. It sounds very simple, but unfortunately, nobody in the world is doing it except for us. We are the only ones because we know that is what the customer would like to do.
“It’s not rocket science, but if you do it on the main casino floor, you have to resolve a lot of technical issues. So that beautiful fringe lighting around the display screens, and the recording of results is all linked. I think we solved those issues quite well. In terms of technology, if we’re not the best, we’re probably one of the top casinos in the world.”
Another simple but effective concept is the ‘New Game Zone’, where players can easily find the latest new electronic gaming machines. “This idea is not new. It’s just a shelf of new products,” explains Mr Chan. “In addition to giving our customers easy access to new products, it also helps us with our slot purchasing strategy. We talk with the suppliers, and say ‘what if we can have this kind of area and put your new product there, and if it’s working well, we will purchase it.
“Setting up the ‘New Game Zone’ took months of negotiation, and it enables us to leverage the market developments this year, with suppliers having difficulty selling their products in other markets around the world. So now we are just launching that concept with new Aristocrat products, and probably we will be able to work with other suppliers in future.”
Melco Crown Entertainment is also the only operator in Macau to offer floorwide slot jackpots. Dragon’s Treasure Floorwide Jackpot, launched on 30th July, 2010 at City of Dreams, starts at HK$3 million. The company plans to boost its jackpot appeal by linking the floorwide jackpots at City of Dreams and Mocha Clubs (the slots at Altira are run as a Mocha venue).
The mass market gaming performance of City of Dreams has trailed that of its Cotai neighbour, The Venetian Macao. Melco Crown Entertainment’s gaming innovations, which are especially appropriate for the mass market (slot and main floor baccarat players), could help narrow that gap. Already, the gap seems to be narrowing following the launch of two big new entertainment initiatives: The HK$2 billion ‘The House of Dancing Water’ water-based show, launched in September 2010, and Club CUBIC, one of Asia’s largest and glitziest nightclubs, which opened 1st April, 2011. “Our company consistently focuses on not only the hardware, but also on the software,” says Mr Chan, “and we’ve programmed a lot of other attractions for City of Dreams, like the pool parties at Hard Rock Hotel from the end of May.
Mr Chan believes the next five years will be a critical period for the development of Macau’s mass market as a whole. “I cannot give you a timeline for when mass would be overtaking VIP, but I foresee very positive growth over the next say five years time frame.”
He points out infrastructure improvements and the improved critical mass of offerings on Cotai following the openings of the Galaxy Macau megaresort this month and properties on Sands China’s plots 5 and 6 in the following months will bring a slew of new mass market visitors to Macau.
Mr Chan believes a bigger mass market driver, though, will be the rise of “China consumerism”. “The whole consumer landscape in China will change over the next five years. It’s really the five year plan for China, which is well communicated to the China community. So whereas in the past China relied a lot on foreign direct investment to boost its economy, over the next five years, internal consumption will contribute more to GDP. Entertainment is one of the big things that will gain from rising consumption.”
“So we expect more people will come over to Macau because of its unique attractions. And that’s not only gaming—even though gaming is already a big attraction because you can’t gamble in China. But there’s also a lot of other entertainment here.”