Inside Asian Gaming

7 6 trips, according to HKTB. Their average retail spending compared favourably with western visitors, at HK$4,705 (US$602). Although such market comparisons and the growth of China’s economy suggest the new look Macau will be a success, major brands aren’t entering the market purely based on guesswork. Daisy Sam, head of research in Hong Kong for Synovate, the international market research company, says a number of clients have asked it to compile reports on Macau’s prospects. She says:“We have done work for clients on the Macau retail market, but it’s propri- etary material, so we can’t share it. “What I can say though is it will take some time for Macau to build an image as a shop- ping paradise, given that there are limited fa- cilities at the moment. Most visitors from the People’s Republic do not currently see Macau as a shopping destination.” Stanley Ho had a four-decade long mo- nopoly on casino operations in Macau until 2002. His children understand the direction the market is now taking, and have adopted the gaming, shopping, dining and general entertainment business model first devel- oped in Las Vegas. Other mega projects Melco-PBL Entertainment, the joint venture of Melco, run by Dr Ho’s son Lawrence and Australia’s Publishing and Broadcasting Ltd run by James Packer, will provide the gaming licence for Macao Studio City. Melco-PBL’s Crown Macau at Taipa, which was due to open at time of going to press, will also have retail space, as will Ponte 16, the project part owned by Dr Ho’s Sociedade de Jogos de Macau and due to open later this year on the edge of the old port. Hongkong Land will be a partner with Shun Tak Holdings, run by Dr Ho’s daughter Pansy, in One Central, a development on Ma- cau peninsula, which will have luxury shop- ping as well as up market apartments. In today’s globalised and highly integrat- ed business environment, retail brands are nearly all controlled by conglomerates with a wide range of business interests. This helps to create investment synergies between brands and resort developers not seen in previous economic cycles. DFS, the luxury mall operator planning a presence at Cotai, is part owned by LVMH Möet Hennessy Louis Vuitton. LVMH in turn owns scores of brands, including Fendi, Kenzo, Donna Karan, Marc Jacobs, Guerlain, Givenchy, Parfums Christian Dior and Tag Heuer as well as Louis Vuitton itself. DFS, originally known as Duty Free Shoppers, was founded in Hong Kong and was once part owned by Stanley Ho’s Shun Tak Holdings. Getting connected Enclosed, air conditioned shopping is partic- ularly suited to southern China’s hot and hu- mid climate. An increasing amount of Hong Kong’s retail space is now connected either directly to underground railway stations, or to climate-controlled walkways perched above that city’s notoriously noxious traffic. On a recent visit to Macau, Sheldon Adel- son, the chairman and principal shareholder of LVS, claimed one of his friends was so en- grossed with a visit to his Venetian property in Las Vegas, that the friend had no idea what the weather was like outside. There has been some scepticism in the media about whether Macau can manage in a few years what it took Las Vegas 20 years to achieve, namely a transformation from a hardcore gambling town to an all-round en- tertainment destination. Atlantic City parallels Mr Parker says there are clear parallels be- tween Macau’s development and that of Atlantic City in the United States – another casino town that previously had a public re- lations problem. He explains: “Atlantic City and Macau are places that have had an unfortunate percep- tion problemover the years.Bothwere consid- ered to be hardcore gaming towns with visitor profiles including large numbers of people from lower socio-economic groups. They are now moving towards a more balanced profile of the sort we’re seeing in Las Vegas.” Taubman built The Pier at Caesar’s – a 350,000 sq. ft luxury shopping mall as an ex- tension to Caesar’s Palace in Atlantic City – against the advice of some pundits Mr Parker says:“The same nay sayers who are wondering whether Chinese visitors to Macau will shop or dine or stay in luxury ho- tels – all those same questions were being asked when we started planning that Atlan- tic City project several years ago. “Now we are six months in to operating. It’s been terrifically successful and everyone’s been saying it was about time this was done. Everyone’s a genius now!” He says retail sales in the New Jersey mall are now approaching Las Vegas levels of productivity. Las Vegas will have 324 sq. ft of shop space per hotel room by 2009. Incentives overplayed Mr Parker thinks a recent media report that LVS was offering major incentives to retailers to come to Macau, and which LVS declined to comment on, has been overplayed. He says:“Rental incentives and contribu- tions to store construction are very common around the world – apart from Hong Kong – that is why the article struck a chord with the local community. More recently in Hong Kong we have seen incentives being given and we have seen important retailers getting large contributions to their costs. “I think it’s important for Cotai overall that The Venetian opening is successful and the shopping centre is successful and the re- tailers in there achieve the type of revenues they hope for. We’re very supportive of that and hope it all comes together. “The debate used to be about, ‘Oh will people shop in Macau and will gamblers be interested in luxury goods,can they afford it?’ etc – all that stuff that’s really plagued Macau over the last 12 months. That’s a redundant argument now in our minds.” Macau stands out “We are a conservative,prudent company.We looked at a few hundred deals around Asia in last couple of years, and selected Macao Stu- dio City in particular to be our first project in Asia. We really as a company believe in the casino-retail story – the synergies between gaming and shopping are very clear to us. “The whole thing about casino retailing and why companies like ours are keen to in- vest, is that these resorts create an emotion in the minds of visitors that makes those visi- tors the perfect consumer.These projects are all about creating a fantasy and then fulfilling that fantasy and really providing a disloca- tion from visitors’ own realities. “People have got time and they’re in the mindset to shop before they even walk into the store. Once I started to understand that myself and started to think about the way my wife and I shop when we travel, I understood that it’s really about the human condition. Casino resorts are just taking advantage of that human condition and that’s why this en- vironment produces the revenues it does. “We have been successful in Atlantic City, in Las Vegas and now we expect to be suc- cessful in Macau.” Morgan Parker The Pier at Caesar’s