I remember the day when Chief Executive Ho announced his latest measure to contain the coronavirus outbreak – the closure of all casinos for two weeks. An hour later, I took a quick trip to the closest supermarket and found a long line of people queuing to pay for essential items they thought they would need to see themselves through the impending crisis. The fact was that this crisis had already been around for more than a month in cities in neighboring China made me think it would never come (to Macau), but I was obviously wrong. For a moment, I was lost.
Opinion | Desmond Lam –
Professor in Integrated Resort and Tourism Management at the Faculty of Business Administration, University of Macau. He can be contacted at [email protected].
Long before all of this happened, people I knew used to be amazed by how much Macau had achieved since its casino gaming liberalization. A phenomenal 18 years of progressive development from 2002 to 2020 saw the shifting of business emphasis from the Peninsula to Cotai, from gaming to non-gaming, and from hardcore casinos to world-class integrated resorts. Macau has rapidly turned into a city of cultural fusion between the East and the West, a place with a body, soul and spirit. But then the coronavirus outbreak made its first appearance in January and became more serious the following month. In March, Macau’s gross gaming revenue was a fifth of what it had been a year ago, as fewer visitors were coming into the city because of the various regulatory measures implemented by the government. So, industry analysts and observers are now projecting a long and weary recovery for Macau’s integrated resorts. There are numerous speculations of what Macau and its integrated resorts will look like in the post-coronavirus era. After all, the renewal date for casino gaming concessions is fast approaching.
But regardless of what will happen during this period, it is essential that Macau’s integrated resorts remind themselves that desperate times do not always call for desperate measures. As we make plans about manpower arrangements, reducing bottom-line, stimulating sales and marketing, and tackling immediate management issues, we should nevertheless refrain from over-reacting. Over the years, Macau has grown stronger – not only its “body”, but also its “soul and spirit”. This crisis will be a test for everyone, be it the government, the community, or our integrated resorts.
The society as we know it has already shown signs that it is slowly getting back to normal. Within their communities and neighborhoods, residents are going shopping in supermarkets and patronizing their favorite local eateries and drinking spots. Macau’s recovery has started from those things that matter the most to residents. So, while people invade Coloane’s open space looking to engage in “healthy” activities (i.e., trekking by the hills and beaches), the number of visitors to integrated resorts and casinos remains extremely low.
As our integrated resorts contemplate their recovery strategies and measures, it is important to always remember that competitors are also friends in this period of crisis as well as afterwards. Macau’s recovery efforts will multiply in effectiveness only if the industry as a whole works together, instead of staying divided into singular businesses competing for every customer and their dollars. For centuries, Macau has been a place where the East meets West, where government, people, and businesses work in harmony to improve each other’s lives. Therefore, it is important not to start a war with others (e.g., engaging in a destructive price war), but to work on a win-win situation when we plan our recovery strategy. This applies not only to integrated resorts, but also to their relationship with local small- and medium-sized enterprises. We should try to co-produce, co-serve, and co-strive along with the smaller (local) players in the marketplace.
During this time, we should not take a single market approach, but rather a modular and flexible approach, as we reconnect with our market and its various segments. Not only do our product offerings differ markedly in customer values, our visitors and customers are not all the same either. Some of the regular customers may have been more affected than others, and it may take a longer time for them to regain confidence and be willing to revisit our integrated resorts; particularly people coming from China’s most affected regions and some Southeast Asian countries like Malaysia and Singapore. Others, however, have not felt the pinch and are on the (potential) verge of recovery; for instance, those from Macau, Hong Kong, and our closest neighboring cities. Specifically, not all our gaming customers are alike, the three basic segments at the very least – mass, premium mass, and VIP. Perhaps, a moderate targeting of a small number of VIP gaming players may be more viable compared to a wide targeting of our mass gaming players, as any recovery is likely to be led by the former rather than the latter. As we promote in phases, our customers will eventually come back. In my humble opinion, a full recovery is only a matter of time.
In these trying times, Macau and its integrated resorts must have greater faith, courage, and wisdom. We must not forget our “soul and spirit”, and that of our employees’ – enduring values that were built over the years. We need to be more focused, creative, and innovative in order to overcome the losses resulting from the current coronavirus pandemic. History tells us that, in due course, Macau’s gaming and non-gaming customers will be back; although that will take time. The pace of recovery will partly depend on Macau’s ability not only to reassure visitors that it can overcome the inherent “(physical) dirtiness” of its hospitality businesses – an industry where people matter more than anything else, but close interactions among people, machines, and equipment will represent a risk during the post-coronavirus recovery. Needless to say, a wiser use of modern technology and a sound implementation of regulatory measures to ensure cleanliness are important in mitigating this risk.
Macau must reinvent itself, create greater and more attractive customer values, and actively promote them to its marketplace. As a matter of fact, anything involving risk-taking is potentially relevant and compatible with Macau’s traditional businesses – from gaming in casinos, to betting on horse races, to lottery purchases, to bond and equity trading, to bungee jumping, extreme sports, to high-tech drone races, and e-sports.
Undeniably, Macau’s recovery effort is closely tied to the recovery and stimulus policies implemented by Mainland China and Hong Kong. For years, Macau has aimed to diversify its portfolio of products (within gaming and/or non-gaming) and customer base (away from Mainland China to the rest of the world). This has proved to be a tall order in many aspects, and there is always the question of whether there is an economic need to do so. This emphasis will remain with this coronavirus pandemic as well as in the post-crisis era; it will always be a never-ending desire and search (by the government).
Finally, on the road of recovery, the people who bear the soul and spirit of the city clearly play a significant role. The strong 350,000+ labor force will bear the burden and face the challenges. They need determination, guidance, education and, more importantly, leadership to move forward. Macau has gladly become a magnetizing city which trained capable people to take up the tasks of developing it into a top-rated destination for businesses and tourists alike. This recent outbreak has given rise to, and demonstrated, the capability of the government’s new leadership. But has it done so for the executives in the integrated resorts? To this end, a greater collaboration with local training and educational institutions will be needed to build a stronger local labor force and to create a learning platform to share as well as disseminate knowledge, wisdom, soul and spirit. As Macau’s government, employees, businesses and local educational institutions develop their capabilities further, the city, I believe, will return with an ever stronger soul and spirit to meet future challenges.