As the only place in China where gambling is legal, Macau has long established a name for itself as the gambling center of Asia, raking in gaming revenues that rivaled that of Las Vegas or Atlantic City. The glitter of the semi-autonomous city, however, has dimmed somewhat after the Chinese government started cracking
As the only place in China where gambling is legal, Macau has long established a name for itself as the gambling center of Asia, raking in gaming revenues that rivaled that of Las Vegas or Atlantic City. The glitter of the semi-autonomous city, however, has dimmed somewhat after the Chinese government started cracking down on corruption. According to Macau's statistics and census service, GDP for the first three quarters of 2015 shrank by 25 percent, with a 24.5-percent contraction in the third quarter year-on-year.
Gaming revenues continued to take a huge hit for a second straight year, reportedly falling 34.3 percent in 2015. VIP gamblers continued to stay away as the government continued its anti-corruption campaign and implemented additional measures such as the increased oversight of certain bank transactions to address illegal cross-border financial activities and money laundering. Analysts predict a further fall in numbers if the government approves the proposed full smoking ban in casinos.
This makes for trying times for local casinos, many of which are reevaluating their company plans and business models to stay afloat. “For the gaming operators, it continues to be a time of uncertainty and planning for future developments. Customer offerings and marketing strategies must be reviewed to encompass these changes,” remarked Bob Ruggles, Business Development Manager of APAC at Pelco by Schneider Electric.
The Changing Landscape
Although visitor arrivals in 2015 were only down 2.6 percent compared to the year before, it is quite evident that they are catering to new clients. Instead of high-stake gamblers, mainstream tourists now account for the majority of people visiting Macau. This resulted in a 39.9-percent drop in VIP baccarat gross gaming revenues according to figures released by the Gaming Inspection and Coordination Bureau. Official data also showed that the number of Macau-registered junket operators fell a significant 16 percent.
The results of this change can be felt around the island as shares of local casino operators fell 40 percent. Some operators have become tentative in starting new projects or holding their grand openings in the lukewarm economic environment, causing big casino resort projects, such as the MGM Cotai and The Parisian Macao, to push back their original opening dates.
Security Industry Holding Steady
Despite this situation, it appears that the security industry in Macau remained relatively stable as the services it provides play an integral role for both old and new ventures. “There are projects that have been postponed and delayed pending new cost justification and a refocus on priorities and the scale of development. However, security and risk mitigation is a very important and necessary part of projects that are ongoing. Therefore, the integrated security project scope has been less affected by the political and economic environment,” said Peter Francis, VP of EMEA and Asia at Gallagher.
Business is still coming in in the form of system upgrades and from projects that are already ongoing. “Gambling is still the most attractive target market of security. Besides new construction projects, many existing analog/hybrid systems in casinos are going to be upgraded and potential demand is still huge,” said Gary Deng, Product Marketing Manager (Engineered Solutions and Software) at Bosch Security & Communications Systems.
But it doesn't mean that the effects of the economic slowdown has not trickled down to security companies operating in Macau. “Budgets are smaller and projects might not entail the latest products on the market,” shared Michael Ng, Regional Sales Leader, Security for Hong Kong, Macau, and Taiwan at Honeywell Security and Fire. “In the past, casino operators generally asked for the latest products for new projects, but now they tend to look for more ‘practical' solutions with good price-performance ratio.”
Adding More Value to Projects
As casino operators are becoming stricter with their budgets, competition for projects become partly cost-driven, which makes it doubly important for security companies to consider adding more value and benefits to their services such as product support and customer service.
For Honeywell, professional sales and technical services are the core of their businesses. “We explain thoroughly to casino customers, especially to their technical teams, our product features – how user-friendly our systems are, what advanced functions we have to help improve operation efficiency, etc. Moreover, we emphasize the benefits our solutions will bring to daily operation, manpower allocation, maintenance, and so on,” said Ng.
Adding value can also come by providing clients with choices that can work together or work with the original system in place. According to Lawrence de Guzman, VP of APAC at Vicon Industries, standards-based, open platform products will allow customers to pick and choose products that would best fit their budgets. “This approach is very scalable and optimized to support a lower total cost of ownership (TCO) and higher return on investment (ROI).”
Casino operators are always on the lookout for applications that can allow them to gain new insights for improved security and non-security decision-making. “The security industry will continue to develop through better video content analytics. Not only will this allow customers to mine their video data to improve business decisions, it will allow customers to be more proactive with real-time response to threats,” said Ruggles.