Interview: Steve Wolstenholme
How is the integrated casino-resort model shifting to increase non-gaming revenue?
STEVE WOLSTENHOLME: Gaming is only one component of the wider hospitality and entertainment industry. If one looks at broader demographics, even in traditionally risk centric cultures, there has been a natural evolution from gambling and casinos into a higher appreciation for travel and non-gaming amenities.
Gaming will be a central part of the entertainment and hospitality business in Asia; however, with the natural change in the desires of customers, non-gaming offerings will play a more important part in the long-term business model of integrated resorts. As a result, it will become increasingly more important for operators to attract families and leisure travellers, most of which will not select a destination based on gaming options. This trend will be further supported by the need of resorts to be socially and morally responsible about their business.
If one looks at the Macau model, its market has been heavily reliant on gaming, with up to 90% of its revenue being generated by the casino industry, particularly from the VIP and Junket operations. Recent crackdowns by the Chinese government, as they seek to tackle harmful practices, have had an effect on the revenue streams for heavily exposed markets to China, like Macau. Whereas growth over the years has been robust and has driven significant casino investments, the industry has reached the realisation that the model needs to evolve to be sustainable over the long term and should be prepared to deal with the ripple effects of emerging disruptions. This is especially true given the attitude of the Chinese government towards gambling and the need to address social responsibility issues surrounding the industry. Macau is still experiencing expansion; however, it will face challenges as the business model transforms itself in tandem with changing times. On the other hand, if one looks at the Las Vegas business model, successive recessions periods did not affect the casino industry until 2008, when the recession caused a severe impact in business travel and people’s ability to spend. The events of 2008 made Las Vegas recognise the need to change the focus of its model, which led to its current status, where non-gaming components comprise 70% of its revenue.
What kind of integrated resort would be most appealing for local and international markets?
WOLSTENHOLME: The Philippine business model for integrated casinos has two components and responsibilities, the local and international markets. If one looks at the market locally, the country exhibits a growing and thriving middle class, and therefore casino operators look at this expanding customer base as an critical source of demand for entertainment. If the Mall of Asia has foot traffic averaging up to 400,000 people per day, it shows the high prospects for tapping into this market, which may have smaller expenditures and be less gaming-oriented, but provides scale and larger interaction with other amenity offers within the integrated resort, from dining to entertainment. As a result, we must provide diverse quality products.
Gaming is important; however, it is only one form of entertainment. We aim to successfully attract the local market by customising ourselves to Filipino preferences as opposed to being a traditional integrated resort and casino. To ensure this, we must be attractive to Filipinos through our services and a source of pride, given the role the project represents for the country’s tourism efforts. The Philippine market has some similarities with the Las Vegas market; therefore, we need to recognise those dynamics to translate them into our entertainment experience offerings. From a mass-market standpoint, gaming has to be fun and socially responsible, while being complemented with other family-oriented amenities.
You have reached the limit of premium articles you can view for free.
Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.
If you have already purchased this Report or have a website subscription, please login to continue.