Too late for the party?

LOS ANGELES –Whenever I come and visit for Christmas, we usually end up in Las Vegas on the day after Christmas. But not this year. I decided I did not relish the thought of being caught in really bad traffic jams on the freeway leading to America’s playground like we did the last time around. I am talking about a  world class traffic jam for miles in the desert that makes EDSA seem like child’s play. So I suggested that we go and see other places in California instead that may not attract as much traffic.

But to many resident relatives here, Las Vegas is the place to go for the whole family. That’s because America’s gambling city has metamorphosed into a family entertainment center through the years. Non gambling revenue now accounts for at least 60 percent of what the city makes compared to just 10 percent in Macau. Las Vegas had long tried to create another stream of income and that seems to be working in its favor now.

Come to think of it, the times we went to Las Vegas, non gamblers like us ended up enjoying the buffets at the hotel resorts and the bargains at the outlet stores rather than betting on the gambling tables. I remember getting a $10 a night rate in Orleans hotel from an Internet deal. Then there are the big production shows and the amazing thematic hotels and the city lights to keep everyone occupied.

But Las Vegas still lost its perch as the top earning casino town to Macau some years ago, thanks to the heavy gamblers from China. Now it seems Macau must go the Las Vegas route as the big rollers from China no longer come in the usual droves. 

The clean up drive of China’s current president, Xi Jinping has affected Macau’s business. The anti corruption drive has discouraged government bureaucrats from gambling in Macau. Not only are their activities in the gaming tables being monitored, their very presence in Macau becomes suspicious in itself. In the past, it was assumed that pay offs are done in the casinos where money can be laundered. With even high officials ending in jail on corruption charges, officials are now extra cautious.

My friend Ed Liu, an American Chinese lawyer in San Francisco who watches China events with a keen eye believes the anti corruption drive of China President Xi Jinping will be relentless enough to affect the current business model of the Macau casinos. “The CCTVs in Macau are video-recording all the ingress and egress entrances of Macau casinos. These corrupt Chinese officials are in panic mode. They are dreadfully mortified of being caught gambling in Macau, Singapore and are trying to go as far away as Western safe havens to escape scrutiny.”

That’s why Macau’s gambling business had slowed at a time when they are still taking in investments to expand existing casinos. The New York Times reports that gambling revenue dropped by nearly 20 percent last month. “The stocks of casino operators have slumped after Beijing announced that the Chinese police would be cracking down on the flow of illicit money through the territory.”

Now, the NYT reports, Macau is taking a hard look at how to wean itself off its heavy reliance on gambling. Macau is now transforming itself into another Las Vegas entertainment city that is able to attract mainland Chinese visitors who will spend their vacation money not just at the casino tables. That explains the big boxing matches including those of our very own PacMan.

The Chinese government in Bejing has also put pressure on Macau to transform itself into a family style entertainment zone, pretty much what Las Vegas is today. Now that gambling licenses for many of the Macau casinos are up for renewal soon, it had been made known to them that a big part of the criteria in assessing casino operators will be their development of nongambling facilities. 

That will not come easy for Macau’s casinos. Last year, some $45.2 billion were earned at the gambling tables accounting for some 80 percent of Macau’s revenues. Macau’s revenues are expected to shrink one percent next year because of this weakness in the VIP gambling market. The middle class mass market on the other hand, have many other options in the region, including Singapore, South Korea and now the Philippines that offer more than gambling.

I recall that when Pagcor’s Entertainment City was being conceived, it was justified on the basis of a large market of Chinese big rollers. Now that our casinos are starting to open, we are finding out that even Macau is having problems attracting the usual crowd of Chinese big rollers. Are we too late for the party again? An informal Chinese government  ban on Chinese tourists visiting the Philippines that covers group tours also does not help. 

I am sure the investors behind Solaire and City of Dreams, the two casinos operating now at Pagcor City are hoping the market is still there. But they may have to reconsider their business model. Perhaps the total entertainment approach they are now trying will work. It worked for Las Vegas and Macau is trying to follow that too.

In this regard, we do have an edge over Macau. We have a deeper reserve of talent for spectacular Las Vegas type shows. We also have tourism sites from beaches to pristine forests that tourists traveling as families will want to visit. This may yet be just the thing that will enable Tourism Sec. Mon Jimenez to get his ten million visitor goal by 2016.

But there are big hurdles to surmount. Our bad peace and order reputation made worse by a poor image of the police is a major hurdle. So is the lack of adequate infrastructure even in the National Capital Region that is perpetually snarled in serious traffic jams. For so long as we have officials like those at DOTC who do not have a sense of urgency in getting their projects done, we will lose this opportunity to capture all those visitors and our casinos may eventually have to be converted into something else.

With just one and a half years to go in the Aquino watch, I doubt if it will be able to do much. Politics will be top of mind and the economy will continue to be on auto pilot. Sayang because we do have an edge in terms of resources to fight for those who would otherwise go to Macau for their vacation. If only we can get down to business, we will certainly get far in this world. Unfortunately, it may not be the case... We are late for the party as usual.

Outstanding Pinoy

I found very good news in my Facebook newsfeed last week. A Filipino, the son of a former colleague, was the valedictorian of the 2014  EMBA class of INSEAD in Singapore. 

Rudi Ramin, a 35-year-old executive of Google Asia Pacific in Singapore, did the nation proud as he delivered his speech as his class’s valedictorian before the holidays. The only Filipino in his class, Rudi was a magna cum laude accounting graduate of UST, he has also worked in Unilever initially in Manila and later in Singapore on a regional marketing role. He also previously worked in Krafts Food (now Mondial) also in Singapore.

Rudi’s father, also named Rudi, was a former reporter of Business Day and trained under the legendary Raul Locsin. Rudi the Elder and I worked together in Advertising and Marketing Associates under the late Tony de Joya. His mother, Rose, was de Joya’s executive secretary for as long as I could remember. 

It makes me feel good to see that the next generation is doing very well, in fact, improving on the previous one. My own son, just a little younger than Rudi, was also the only Filipino in his MBA class in Cambridge when he graduated six years ago.

It is just unfortunate that Rudi the Elder met a very untimely death some years ago. I am sure Rudi would have been so proud of his son as Rose was on that day when Rudi the son did the country proud in that INSEAD graduation.

Congratulations again.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco