Inside Asian Gaming

July 2016 inside asian gaming 35 Blast from the Past June 2011 Pleasure to meet you – Galaxy Macau’s impressive marketing push No cage fighting There are plenty of cages located along the sides of the mass floor – unlike some properties we could mention where guests deserve a marathon winner’s medal by the time they a) locate; and b) walk to; the cage. One glitch we did notice, though, is that the queues of people at the cages on the second day were snaking back into the slot and table playing zone. That could be a function of several things, including the unusually high traffic levels and the relative lack of live operational experience on the part of at least some of the cage staff. If the issue persists, an easy fix should be to move some of the banks of slots further in from the side of the room, though the same issue might be slightly harder to fix in the table zones without creating a sense of crowding. A big VIP offer Much comment and analysis has naturally focused on what Galaxy Macau will do for the mass market. But in a place where around 72% of gross revenues come from high roller baccarat, no new property can afford to overlook the VIP segment. Galaxy Macau has a lot of product and variety, with eight main VIP rooms around the property as well as high limit tables and slots as the bandstand-like centrepiece of the main floor (a characteristic shared with the unsung SJM-licensed Babylon casino at Fisherman’s Wharf). The feedback we got from industry sources is that commission rather than revenue share is most commonly the business model being used in the Galaxy Macau VIP rooms (at least in this opening phase). Perhaps the more important general point is that Galaxy doesn’t try and rob Peter to pay Paul in its dealings with junkets. In other words, it doesn’t try simply to restructure its offer and claw back its profit in some other way, such as squeezing the junkets on soft costs such as player ‘comps’. Galaxy has built a reputation for building solid and mutually beneficial relationships with the junkets. As one VIP room executive put it to us: “The Chinese way in business is to share so that you all get rich together. The Western way is to beat the other guy and get rich at his expense.” Cotai is not a zero-sum game. The ‘stickiness’ of The Venetian as a first stop on Cotai probably resides in the fact that it’s a photo opportunity entirely independent of its gaming offer. That allows it to capture gamblers and non-gamblers. It has a lot of shops, even if conventional wisdom suggests there are rather too many mid- market, underwhelming brands (to Chinese consumers at least). Some analysts we spoke to – while very impressed by Galaxy Macau’s gaming offer in both key segments – still wonder if the property can carve a role as a tourism stop in its own right. They cite some doubts that the artificial beach – impressive as it is – will achieve that. After the initial opening rush, Galaxy Macau needs to establish itself as a first gambling stop on Cotai. The shopping offer by itself won’t be a crucial draw. There are also important logistical reasons why it will be a challenge to make Galaxy Macau a ‘second stop’ on Cotai for Venetian customers. Galaxy Macau may be just a little too far away from The Venetian to be a comfortable walk in a muggy Macau summer. Getting a taxi away from The Venetian often requires a long, uncomfortable wait outdoors. City of Dreams has vulnerabilities – the Hard Rock casino is not a well-known brand in China and is often sparsely populated, in our experience – but it is only a short walk from The Venetian, making it a natural number two destination for Sands China’s Cotai customers. IAG is aware, however, that Galaxy’s management has been very focused on creating the right infrastructure in terms of marketing, bus services and greeters to develop the pipeline of ‘first stop’ visitors to Galaxy Macau. That’s important, and is likely to be key in ensuring the sustained success of the property.