INSIDE ASIAN GAMING | February 2014 4 Inside Asian Gaming is published by Must Read Publications Ltd 5A FIT Center Avenida Comercial de Macau Macau Tel: (853) 8294 6755 For subscription enquiries, please email
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[email protected] EDITORIAL Vegas at a Gallop T he China Tourism Academy, a think tank affiliated with the Chinese government’s National Tourism Administration, expects its fellow citizens will have made more than 220 million trips over the extended Lunar New Year/Spring Festival holiday. And for the first time more of them would be celebrating the season outside the country than in it. The academy’s canvassing indicated that some 70% of them planned to go abroad. In all, they were expected to spend RMB130 billion (US$21.4 billion) ringing in the Year of the Horse. On Las Vegas Boulevard, where it’s always the Year of the Whale, they know all about the power of the China consumption machine. The country ranks only fifth among Sin City’s overseas feeder markets, but it’s been carrying gaming revenues throughout this recession-blighted decade. Since overtaking blackjack in 2009 as the Strip’s highest-grossing table game, baccarat, which has comprised on average all of 9% of total table inventory, has generated 41.4% of table win, 43% at the 17 largest properties as measured by gaming revenue. A decade ago, it accounted for 16.6%. That was before Sands Macao opened and touched off a revolution in the industry whose reverberations continue to shake things up on the other side of the world. Flashing back to 2009, when the town’s vaunted mass market was gutted by the downturn, blackjack and slot revenues, plummeted in 2009 by 20.3% and 12.6% from a prior year that for pure shock value was even worse. They’ve yet to recover. Core mass revenue—blackjack, craps, roulette, slots—has grown the last five years at a rate of 1.36% a year. That is to say, it’s hardly grown at all. Slots, which account for almost half the Strip’s win, essentially have gone nowhere at +0.77%. Baccarat revenue has grown at an annual rate of 10.25%. Volumes have grown by more than 35%, more than double the rate for table games as a whole. Take out baccarat and the drop that’s left has grown a total of 7%. The look of the street has changed just as dramatically. There are about 12,500 fewer machine games on the Strip than a decade ago, 100 fewer blackjack tables. Since 2003, the number of baccarat tables has grown from around 80 to more than 280, and almost all of them are in those 17 largest casinos, the ones that can afford to fade the costs of marketing and lending to an elite who dropped somewhere around $11.6 billion on the game last year, about $40.7 million per table. For the casinos it was a risk worth taking, too, seeing as the $1.58 billion they kept surpassed their take from blackjack, craps and roulette combined. And it was the big Macau three that scooped upmost of it. Las Vegas Sands, Wynn Resorts and MGM Resorts International continue to leverage their hugely lucrative businesses in China for outsized returns in the desert. Which is why GoldenWeek has taken its place as one of the signal events on the Strip calendar, right up there with the Western New Year and the Super Bowl. It’s when a flock of private jets heads out over the Pacific, and resorts up and down the Strip hire feng shui masters to get everything in proper order ahead of their return, and white envelopes are whisked from the rooms, and MGM brings in Buddhist monks to bless its hotels. It’s why Genting has taken a pile of rusting girders at the north end of the street off Boyd Gaming’s hands and plans to spend $4 billion there on a resort complex that will include a panda habitat and a faux Great Wall and replicas of Emperor Qin’s terra cotta warriors. It’s why SteveWynn is ready to spend $1.5 billion to be in Boston. (Turns out all those bright Chinese kids at Harvard and MIT have parents, as he pointed out on his latest conference call.) It’s why Sheldon Adelson and Lim Kok Thay want to spend even more to be in South Florida. It’s why Genting is cleaning up in Queens and Las Vegas Sands in Bethlehem, Pa., of all places. MGM hosted a banquet at Aria this New Year for 3,000 high rollers. They decked out the Events Center in red and gold for the occasion. Chefs from the Asian gourmet rooms at Aria, Bellagio and MGM Grand designed the menus. The tables glittered with two-foot-high centerpieces of sculpted sugar in the shape of horse heads. Guests were feted with performances by singers, dancers and theater troupes from China, Hong Kong and Taiwan. Up the street at Mr Adelson’s Palazzo, floral horses 18 feet tall filled the Waterfall Atrium, part of a lavish display that included figures of sheep (Horse’s“secret friend” in the Chinese zodiac), and masses of oranges and tangerines and chrysanthemums and bamboo and chests filled with coins and jewels—and bats, yet another symbol of luck. If you’ve seen the pawn shops that overrun the streets surrounding Macau’s casinos, you know all about the bats. Reports are the decorators at Palazzo and The Venetian are already thinking about 2015’s Sheep and placing their orders. They want to make sure the nation’s growers will have enough flowers to supply them.