Senior Gaming Exec. Andy Choy: shift to mass a positive for the long-term
Not only for Macau, but an overall shift within the gaming industry to a mass-market focus will be positive in the long-term, although direct VIP play will still be a strong revenue contributor, says Senior Gaming Executive Andy Choy.
Bullish on the Philippines, while also noting Macau’s return – with strong non-gaming amenities, Choy also has his eye on Thailand as the next big market that “can’t be ignored”.
Senior Gaming Executive Andy Choy, thank you very much for sitting down with us here at Asia Gaming Brief at the ASEAN Gaming Summit. We’ve seen a major return to growth in Macau’s January and February GGR. Revenues were even higher than expectations, we’re expecting the first quarter is going to be quite good as well. What do you think is the future for Macau gaming?
I think Macau gaming has a very bright future ahead of it. In fact, I think there’s three reasons. The first of which is obviously with China moving to a no-COVID policy where things are opening up, you have all that pent-up demand within China – it can only mean good things from account. Secondly, I think Macau has built up critical mass of infrastructure, not just gaming but even on the non-gaming side, that can support a multi-day visit to the market.
There’s a lot of great stuff for consumers and leisure travelers to come check out. And the third thing is the commitment to non-gaming events that each of the concessionaires has agreed to as part of the license renewal. I’m very excited to see what everyone does, all the innovation and non-gaming amenities and events in the next few months and years. And so, in general, I think the future looks very, very, very good for Macau.
The combined investment pledge by operators is $14.8 billion, with some 91 percent going to non-gaming. Which one of those operators do you see as best positioned to be able to take advantage of their non-gaming offerings?
The two that stand out to me really are Galaxy and Las Vegas Sands, critically because they have sufficient scale, both in terms of hotel capacity as well as amenities. Galaxy phase three and four are coming online with the largest arena in Macau, that’s very exciting. And LVS with all their infrastructure – with the Londoner now that people can actually come and visit and see, I think there’s a lot of positive things going on with both Galaxy and LVS.
Coming off such a difficult period, Macau has been strongly profiting from the opening up of China again. But that’s also been really good news for Asia in general having the return of Chinese punters to Asian casino properties. Which one of these countries within Asia is now better positioned to be able to welcome back those visitors?
In general, I really am bullish on the Philippines. And specifically because of two things, the first of which is I keep coming back to critical mass being a big component for driving growth. You saw that in Las Vegas, in the late 80s, 90s, into the early 2000s, where you had supply-driven growth.
Every competitor coming into the market, every new property opening just added to the offering and became a must-see attraction, and another reason for somebody to either come to the market for the first time or come back to the market. And I really see that going on here in Manila. Secondly, as far as proximity goes, the market here in the Philippines is very easily accessible from China, different regions and China I think has a lot to offer.
During the pandemic period domestic demand was primarily the income source for the casinos in the Philippines. But then as things opened up a bit more, we did see a return of VIP play. Do you think that that’s going to continue to be a strong component in the Philippines going forward?
I believe that going forward VIP play in the Philippines will be a component but I don’t know that it’s going to be a very strong component. I think in general, with the evolution of gaming in Asia, it’s going to move more towards mass, inevitably. And I believe that ultimately this is a good development. It’s a healthier customer for the industry. It takes a lot of the perceived negative aspects of the industry and kind of sidesteps a lot of those. And ultimately, it is more profitable for the operators. You don’t have that middleman that you’re dealing with in the junket, which oftentimes takes the lion’s share of the profitability from those high-end players.
Also, the VIP player can still be involved in VIP direct, it doesn’t necessarily have to go through junkets.
That’s right. And in fact, if a player comes in direct versus going through the junket, the profitability skyrockets. Sometimes it’ll five to 10 times more profitable as they come direct. And ultimately, if the operators can capture just a small portion of that customer base that was coming through a junket, net they’ll be better off with that.
Well, we hope to see continued growth within Macau, within the Philippines and throughout Asia. Looking at growth markets, what would be one of the primary growth markets that you’re looking at now?
I think when you’re talking about growth markets, there’s really two different ways to look at it. The first of which is – where the legislation is passed, and they’re actually operating, the second are potential new entrants to the market. So, starting from places where there are actual operations, we touched upon the Philippines briefly, as an area that I think is growing and will continue to grow.
Other jurisdictions are Vietnam, where they have the pilots for the locals gaming, which had mixed results, especially because it was essentially during the pandemic. So, it would be interesting to see what happens in that market. As far as emerging markets, the obvious one is Japan that we’ve been talking about for a little while, a long while.
Hopefully there’s some momentum there. And some other potentials, like Thailand, I think can’t be ignored. And (it will be) interesting to see if they actually move forward with their casino offerings.
