Food and drink major non-gaming push: Macau casino ops

Aug 16, 2018 Newsdesk Features, Latest News, Macau  

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Food and drink have been heavily marketed as part of Macau casinos’ non-gaming operations in the past two years, and it has paid off for some via rising segmental revenues, according to information gathered by GGRAsia.

Chinese visitors in particular have become more discerning consumers regarding food and drink at casinos, several industry commentators noted to GGRAsia.

A set of “unique” and “high quality” food and drink offers can be an important draw to bring visitors to Macau as well as the better-known attraction of gambling, said Ben Cavender, principal of Shanghai-based China Market Research Group. “The challenge with food and beverage is that the consumer demand is there but it can be hard to look through all the options available and really understand if the dining available is going to make the trip worthwhile,” Mr Cavender remarked to us.

Most Macau operators have formed partnerships with one or more chefs of global reputation. Some have launched home-grown restaurant brands, such as “Yi”. The latter serves regional Chinese cuisine in “omakase” style at Morpheus, the newest Cotai casino resort tower at City of Dreams Macau, a property promoted by Melco Resorts and Entertainment Ltd. “Omakase” is a Japanese term roughly translating as “leave it up to you” – i.e., the chef – regarding the courses offered to diners. Another locally-produced dining brand is “La Chine”, a French-influenced Chinese restaurant that Sands China Ltd created at its Parisian Macao resort on Cotai.

“We cannot underestimate… how influential a well-programmed food and beverage offer can be when visitors from mainland China are deciding where to go when in Macau,” said Tom Connolly, senior vice president, food and beverage at Sands China Ltd, in comments to GGRAsia. “Food and beverage plays an important role in promoting the company’s properties and is a window into the non-gaming and leisure segment of the business,” he added.

Mainland China has for many years been the single most important source market for Macau’s inbound tourism, supplying nearly 70 percent of the aggregate visitors for the first half of this year.

“We look for brands that have broad appeal; are established through multiple Chinese territories and have strong and participative management teams able to partner with us in delivering the brand’s promise to our customers,” Sands China’s Mr Connolly added. He cited introduction of the Michelin-recognised brand Crystal Jade La Mian Xiao Long Bao as an example. It launched at the Parisian Macao in May. Another branch is due to open at Sands Cotai Central later this year.

The marketing power of social media is important for promoting food and drink operations at casino resorts, especially to Chinese consumers, said separately Mr Connolly, and Kevin Clayton, chief marketing officer of rival operator Galaxy Entertainment Group Ltd.

“Food and dining occasions are shared through social media by visitors to Macau and therefore can be a driver of preference when selecting a resort to visit, especially when there’s something unique to share,” Mr Clayton noted to us. Moky Lam, vice president of food and beverage at MGM Macau and MGM Cotai, resorts run by MGM China Holdings Ltd, mentioned the effectiveness of a mobile phone application from China called “Dianping” that people use to find out where to eat and what to visit during leisure time.

Increasing revenue

Galaxy Entertainment and Sands China noted there had been an increase in food and drink revenue in the past two years. “We have seen incremental food and beverage growth from within our established portfolio while also expanding revenues through our new projects,” Sands China’s Mr Connolly stated.

“Food and beverage revenue in 2017 was US$189 million, representing an 18.1 percent increase over 2016, which was in turn a 6 percent increase over 2015,” Mr Connolly noted to us, referring to the figures disclosed in Sands China’s annual reports. Competing Macau operator Wynn Macau Ltd – which also itemises its food and drink revenues in its annual reports – has also seen year-on-year growth in this segment of business over the past two years.

GGRAsia asked Sands China, Wynn Macau and Galaxy Entertainment to share information on the profitability in recent year of their respective food and drink operations, but had not received responses by the time this story went online. Glenn McCartney, associate professor in international integrated resort management at the University of Macau, noted to us that food and beverage operations take up a “substantial” proportion of the casino operators’ expenditure on complimentary services to customers.

Such casino management spending under the heading of ‘complimentary goods and services’, rose by 6.1 percent year-on-year in 2016 to MOP3.32 billion (US$410.6 million), according to the latest published Gaming Sector Survey conducted by Macau’s Statistics and Census Service. Such expenditure accounted for 30.6 percent of the overall value of complimentary services offered to casino resort clients in 2016, a similar percentage to the previous year, according to official data.

When asked about profitability trends in food and beverage over the past two years among paying customers, MGM China said it was “excited to see a healthy growth” in that segment, despite the fact it was seeing “no reduction in comp [complimentary services]” activity.

Targeting Chinese flavours

Macau resort customers – especially the Chinese ones – were becoming increasingly well-informed and discerning in their food and drink preferences, generally noted the Macau operators that spoke to us. This was not only for high-end dining involving foreign cuisine but also for what Chinese visitors perceived as “home food”, said the University of Macau’s Mr McCartney.

“Today’s consumers are more sophisticated, educated and carry higher expectations than they did two years ago…they have come to expect more services and amenities; at lower costs too, and these offerings can often make the difference,” MGM China’s Mr Lam remarked to GGRAsia.

“These demands have led to the prevalence of services such as offering never-before-seen-in-Macau dining concepts like our Aji [outlet]; different Chinese cuisines such as Cantonese dim sum, hotpot; but also Szechuan cuisine for spice lovers,” Mr Lam told us. Aji is open “24 hours a day with convenient access for our consumers,” noted Mr Lam. Aji is at MGM Cotai, and is headed by chef Mitsuharu Tsumura, who has developed a culinary style known as “Nikkei”, a fusion of Japanese and Peruvian cuisine.

Galaxy Entertainment and Sands China’s representatives told GGRAsia that Chinese diners had become more open than before about trying new things. To respond to this trend, Mr Clayton noted that Galaxy Entertainment had broadened its food and drink offerings – particularly in the past two years – beyond Chinese cuisines, to include a greater number of international styles. These were represented by outlets including Cha Bei, Dean & Deluca, Butao Ramen, Spicy Garden, Café de Paris Macau and The Apron.

Sands China’s Mr Connolly told us: “A good example of how we have responded to this [Chinese consumer demand] is La Chine at The Parisian Macao, where we have broken with tradition and created a French-influenced Chinese restaurant. It has not only proven to be very popular but has also garnered great recognition and accolades on Chinese-based social platforms.” He added: “The same is true at The Parisian Macao’s Brasserie restaurant, serving authentic French bistro cuisine.”

Gourmet campaign

Macau casino operators have also become more engaged in gastronomy-related marketing in response to the Macau government taking a lead last year in promoting Macau as a world-class destination for gourmet food. In late October Macau became a member city of the United Nations Educational, Scientific and Cultural Organization (UNESCO) Creative Cities Network in the field of “gastronomy”.

In remarks to GGRAsia, Wynn Macau noted that it was “proud” to be the host of the “Asia’s 50 Best Restaurant Awards” in 2018 and 2019. “Bringing this renowned gourmet platform to Macau not only helps to enrich the city’s culinary scene, but also offers the ideal opportunity to internationally highlight Macau’s rapid development as a world-class gourmet destination,” the firm stated to us.

The four “globally acclaimed chefs” that partner with MGM China at its MGM Cotai venue – Mauro Colagreco, Mitsuharu Tsumura, Graham Elliot and Janice Wong – contributed to Macau’s culinary scene while also helping the firm in its promotional activities in order to interact with local community members and guests, the firm told us.

MGM China’s Mr Lam told us that his company recently organised what he referred to as a” sharing session” between its consultant chef Graham Elliot, and a Macau government body called the Task Group for the Promotion of Gastronomy and Cultural Industries of The Committee of Cultural Industries. Participants included local entrepreneurs, and topics covered included Mr Elliot’s own career development and his thoughts on culinary trends.

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