Inside Asian Gaming

O ne of the major differences between a Las Vegas and Macau casino property to- day is scale. While a typical property on the Las Vegas Strip would offer a variety of activi- ties and choices beyond gambling and lodg- ing (including fine dining, entertainment and shows, golf, spa and other resort activities), the basics are almost all that the Macau prop- erties have on offer presently. This could be part of the reason for the currently short visits to Macau; another is the much stronger affinity for gambling among the Chinese. An average visitor will spend 3.5 nights during a trip to Las Vegas; while more than 50% of Macau visitors are same-day travellers, and report an average stay of 1.2 nights per visit. With the opening of the 3,000-suite Ve- netian Macao on August 28, the IRs will soon prove if they are able to take Macau to the next level, as they did to Las Vegas in the 1970s to 1990s. The next growth driver will have to come from either expansion of mar- ket segment or extended visits by existing visitors, or both. To examine the first driver, we examined the statistics on China tourism, and found visi- tor growth toMacau has been rising at a faster pace than China’s outbound travellers, indi- cating the territory is more and more an easy choice of destination for mainland visitors. New and modern casino properties have proved to be success formulas to stimulate repeat travels. While we have witnessed a strong 24% year-on-year visitor growth in the first quarter of 2006 after the opening of Wynn Macau in September,Hong Kong visitor growth (36%) surpassed growth of mainland visitors (16%)—most, if not all, of the Hong Kong visitors are repeat visitors to Macau. Changing Macau’s Visitor Profile Macau’s tourism market is currently dominated by day-tripping gamblers. The Venetian Macao-Resort-Hotel will kickstart the push to extend the average length of stay, and draw a more diversified visitor demographic to the city. In his recent comprehensive report on Macau’s gaming industry, Macau Mania II—Battle Royale , CLSA’s Gavin Ho discusses the impact the opening of sprawling integrated resorts such as the Venetian, Macao Studio City and City of Dreams will have on Macau’s tourism and gaming market To become another prominent gaming and entertainment hub like Las Vegas,Macau needs repeat travellers.Today, 82% of the Las Vegas visitors are repeat travellers, and the results from our survey point to a similar 83% for Macau. To keep that ratio high, even Las Vegas needs to erect new and state-of- the- art properties from time to time. The pipeline of new IR launches will sustain Macau for at least another decade. Another major back-up is China’s Individual Visitor Scheme (IVS) that will continue to add additional cities to its coverage—which again has the potential to bring first time and then repeat visitors to Macau. The convention push Another key thrust in the historical de- velopment of Las Vegas is the convention business.This complements the vacation and holiday travel and helps fill the rooms during weekdays and of course the casinos and oth- er entertainment venues at night. Macau’s coming IRs will narrow the hotel occupancy gap between Macau (about 70%) and Las Ve- gas (about 90%), with convention and enter- tainment adding to the value proposition. Conventions are a major component of Las Vegas visitors and revenue, with six mil- lion delegates in 2006 accounting for 16% of total visitors to Las Vegas. Meanwhile the US$8 billion economic impact brought about by conventions represent 21% of the total visitor contribution, according to the Las Ve- gas Conventions and Visitors Authority. Las Vegas generated US$8 billion rev- enue from convention space of 6 million sq ft. (This compares to 1.5 million sq. ft in Hong Kong.) While only Las Vegas Sands Corp (LVS) Importance of repeat travel in Las Vegas Source: Las Vegas Visitors and Convention Authority 6