IR Competitive Strategies: Reinforcement

Integrated Resorts Competitive Strategies:

“Reinforcement”

Contributed by: Simon Tze                                               15 June 2010, Tue

The subject of integrated resorts casino competitiveness was discussed in previous articles/reports in this blog.  This report by Simon Tze places emphasis on “Reinforcement” of casino marketing campaigns need to be carried out by integrated resorts, for creating new growth pipelines.  (Editor).

 

Now that the two Lion City Integrated Resorts have opened and running, albeit they are still having to grapple with some “teething” issues been reported negatively by the local media and all over the Internet.

The key factor for any of the two IR casinos to gain an upperhand over its competitor in the restrictive domestic as well as small Southeast Asia gaming market unlike Macau, is to be able to build a solid mid-tier casino patron base. Once this ultimate goal is achieved and sustained, the winning casino will put the other competitor really “high & dry” under such a scenario.

To do so, the technique of Reinforcement (of casino marketing) has to come into play. But before that, the myth of this Direct Premium players syndrome has to be removed. Many amaturist analysts and industry observers including some authorities are still in their sweet dreams of achieving high margins through the acquisition of Direct Premium players without junket channel, yet able to sustain high turnover of chips play. But reality tells us that this is just an illusion.

Mid-tier (high-limits) casino patrons are the REAL Target that casinos should chase after, regardless of any jurisdictions. The strategy for implementing the Reinforcement of casino marketing campaigns rests upon a sustainable operating platform, focused on Mid-tier casino patrons.

The Casino needs to place adequate resources into creating a Sustainable Operating Platform for Mid-tier payer development. Briefly, the Key resources include but not limited to,

(1) CCF (Chip Credit Facility).

(2) Overseas GSAs network (General Sales Agent).

(3) CCS (Credit Collection System).

(4) Players development system & communication.

(5) Attrition management & maintenance process.

(6) Cultural context (management staffing & qaulity).

The casino that could master all the above software components in an effective integrated business acquisition process will gain tremendous mileage ahead of its competitor in this rather restrictive domestic market consists of mainly the grind market segment, be it from local population or Malaysia.

It was mentioned by a report that the broad distribution of IR casino revenues will be of 35% VIP gaming, 35% Slots and 30% Mass tables. If this is indeed the probable outcome for Singapore IR casinos, that means there’s still a niche for developing the Mid-tier (high-limits) segment from an overwehelming 65% mass gaming pie, pushing for greater EBITDA margins envelope.

In Macau’s scenario, in view of extreme reliance on junket controlled high-rollers betting with 70+% under the reign of VIP gaming territory, there is therefore not much room left for players development strategies to be employed. Singapore IR has the reverse casino landscape in comparison with Macau and hence, instead of cannibalizing the mass grind market, it is more profitable for the casinos to attack the under-developed Mid-tier segment.

However, from observations both the IR casinos are still weak in their respective players development system and processes. We need to take a longer while before it is clear that which casino has good progress in securing the Mid-tier business driver.