The land-based casino business in Asia-Pacific and beyond was simply one among many commercial sectors devastated during 2020 by the Covid-19 pandemic. The economic effects on the casino industry are well documented, with venue closures and dramatic year-on-year declines in casino gross gaming revenue (GGR).
GGRAsia asked several commentators on the Asia-Pacific industry to give their thoughts on what opportunities have arisen from the crisis, that might benefit the sector in 2021 and beyond.
The year 2020 “shook up the industry, forced it to think, behave and operate dramatically differently,” said consultant Niall Murray, a former senior gaming executive in Macau and Las Vegas, and chairman of Murray International (Macau) Co Ltd.
“Many companies had no choice but to take a fresh look at how they do business, how to attract, serve and retain customers, whose service, health and safety expectations had changed irrevocably,” he added.
One particular effect of the crisis has been to increase operator and consumer interest in electronic table games (ETGs). That is according to Joji Kokuryo, a former executive in the Macau market and now managing director of Bay City Ventures Ltd, a Tokyo-based consultancy with specialist interest in Japan’s casino liberalisation drive.
“These products require less human interaction between player and casino operator than regular tables, a key feature in the world we live in today,” noted Mr Kokuryo.
“While ETGs usually run with much lower minimum bets than tables, many products have the ability to include more players per game cycle and also have customisable settings to suit most player segments,” he added.
“Losing out on the human interaction is of course a big deal, so enhancing player experience will be vital for ETG manufacturers moving forward,” observed the consultant.
Domestic play, Japan, better management
The trials of 2020 also revealed another important aspect of resilience in casino markets: whether or not they can draw on a good supply of local – rather than international – players.
Michael Zhu, senior vice president of international operations planning and analysis at consultancy the Innovation Group, told GGRAsia, referring in Macau’s case to players from mainland China, and in Cambodia’s case, holders of foreign passports: “With Malaysia, Cambodia and Macau SAR holding large domestic contributions, they have been able to recover quicker from the impacts of Covid-19, compared to markets with high dependency on foreign revenue.”
Brendan Bussmann, partner, director of government affairs at casino sector consultancy Global Market Advisors LLC, told GGRAsia: “As the industry emerges from the ‘Great Shutdown’, Asia offers one of the greatest opportunities for expansion and growth.”
He added: “Most notably is the opportunity in Japan, that has finalised the [national] basic policy for integrated resorts,” the latter a reference to large-scale casino complexes with related tourism facilities, also known in Japan as IRs.
Mr Murray told GGRAsia that the crisis had shocked the casino industry globally into doing better at managing venues and gaming companies.
“In the past, ‘strategic planning and operations improvement’ at many IRs merely involved looking back at the previous year’s performance, setting a target quarterly percentage increase in revenues and a decrease or maintenance of percentage operating costs, plus an expansion or renovation project or two,” he said.
“This was not real strategic planning or operational improvement,” Mr Murray added. The past year “blew up the entire industry”, he stated.
“Moving into 2021 and beyond, the least successful IRs will dust off their 2019 results, make 50 percent, 75 percent, and eventually 100 percent of 2019 revenue and cost targets over the coming quarters; add some mandated health and safety improvements; but will essentially continue to do business as before,” suggested Mr Murray.
But such a ‘business as before’ mentality had serious dangers, he suggested.
“The market, and possible further epidemics, will reward these companies with decreasing returns, financial hardship and potential obsolescence,” he warned.
The most successful IRs in the recovery period and coming quarters would “learn from 2020, and take a radically different, forward-looking approach to strategy and operational improvement, by providing their post-Covid[-19] savvy customers with modified, innovative products and service journeys, that embrace technology and enhanced-delivery methods, and which are safer, cashless, convenient and more attractive,” Mr Murray said.
The past 12 months “taught us that anything can happen,” said the consultant.
“It made many IR industry participants appreciate what we had and what we lost, not to take anything for granted, and to remember to focus on what is most important for survival in both life and business.”
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”They want us to invest as well. The government there wants to see growth in Macau. We are not that concerned about that issue [licence renewal] at all”
Chairman and chief executive of Las Vegas Sands