Inside Asian Gaming

INSIDE ASIAN GAMING | March 2008 12 says Ms Hsu. As such, Mocha has a vested interest in doing whatever it can to support the overall stability and prosperity of the city it is associated with wherever it goes. The company will continue its diverse charitable endeavours, but also seek to actively participate in social welfare causes, as well as getting its staff more involved. In addition, Mocha Clubs will implement responsible gaming programmes, and provide comprehensive training to staff, starting next month, to equip them to identify and appropriately counsel problem gamblers. Mocha Clubs supports the government’s initiative to raise the minimum age of casino dealers from 18 to 21, in order to encourage would-be dealers to spend more time studying and improve their skill-set. For its part,MochaClubsintendstosetupeducation programmes to help and encourage staff to pursue their studies, and offer sponsorships to staff who pursue courses related to their job fields. Learning from Mocha So what lessons does Macau’s nascent slot market—and Mocha’s cultivation of that market—offer bullish developers ploughing billions into Macau, and the analysts forecasting their progress? Well, apart from the need for patience and realistic expectations, three points come to mind. First, you cannot expect a new property to be firing on all cylinders from the day it opens. When a new Mocha Clubs outlet opens, for example, Ms Hsu says a ramp-up period of three to six months is needed for it to catch up with the performance of existing venues. In the meantime, the increase in capacity will possibly lead to a dilution in overall average net win per machine per day. Considering Mocha Clubs outlets are relatively small, it will probably take longer for larger venues to ramp-up—analysts disappointed with Venetian Macao’s 4Q results, take note. Second, start small and test the waters. Mocha’s inaugural venue at Hotel Royal is small by any measure. “We were confident about the business, but we still wanted to test it a bit,” explains Ms Hsu. Las Vegas Sands Corp was wise to enter Macau quickly with Sands in 2004, at an original cost of US$265 million—an investment which was famously recouped within ten months.Wynn, on the other hand, wanted to make a grand entrance, so ended up arriving over two years behind. Sands was intended as a laboratory of sorts, to test what works and what doesn’t in Macau. It proved there was tremendous demand for a more comfortable and attractive mass-market gambling venue— or at least that market share could be won by providing it. On the other hand, the 700-seat theatre which never staged a performance, and the high-end restaurants that were either scaled back or shut down, demonstrated more time was needed for locals to start demanding Vegas-style non- gaming offerings. Third, and following on from the above—what do you do when you discover players need time to develop an appetite for the new product you intend to offer? Consider using a transition product. Mocha Clubs made use of multi-terminals to wean Chinese gamblers onto gaming machines. This not only appears to have accelerated the acceptance of slots, but also meant Mocha did not have to suffer a lean period as it waited for customers to accept a product they needed time to get used to. Here’s a tricky one though: What is the transitional product to offer before you fly in Beyoncé or the Pussycat Dolls to a 15,000-seat stadium that you could not fill by giving away free tickets by the bushel? It may have been better to start with a more transitional-sized performance hall in amore transitional-sized resort. There’s no turning back now, however, except on the idea that the supply of any newVegas-style product in Macau,regardless of its unprecedented scale in a tiny city, will somehow instantly meet with overwhelming demand. Cover Story