It has been a year of activity and inactivity, events and non-events, giddy successes and flops, and most of all, lessons on what to do or not to in Macau.Stanley Ho’s SJM unveiled its answer to the new operators, the Grand Lisboa, in February 2007. Then came Crown Macau in April 2007, the gargantuan Venetian Macao in September 2007, followed by MGM Grand Macau in December 2007, followed lastly by Stanley Ho’s Ponte 16 Casino on 1 February 2008.

Some readers have raised eyebrows on the lack of commentary on my part on the new SJM properties, saying that I focused purely on the new entrants to the market.

Well, that is undeniably true and for the simple reason that there is nothing to comment on. SJM don’t crow about anything, and to put it simply, their operations and properties are not newsworthy. SJM also don’t brag about anything—probably because they have nothing to brag about.

Where do we even start? To call the organization a relic of the ancient past is an insult to the dinosaurs—when the latter became extinct, it was the result of a global catastrophe, not their negligence.

Despite a flood of fantastic looking properties, new levels of service and other indicators of the modern world flooding into Macau, SJM somehow managed to retain much of its antiquated management structure and operational style.

As another industry observer put it, Lawrence Ho figured it was cheaper to pay US$800m to Wynn to acquire its own casino sub-concession than have to deal with SJM in the long run. And I would have to say that he’s not too far wrong there.

Walk into any SJM managed property and the first thing you will notice is the lack of interest from the casino staff. Sure, they have all since been instructed to go through the motions of welcoming players to their tables, but beyond that, there is no real management understanding of customer needs and service. The dealers still have to throw their dirty used tissues on the carpet as they are not allowed bins in the pits. Talk about unsanitary conditions and the perception it gives customers.

Go up the ladder to the shift managers in black satin jackets—yes these creatures do exist, though rarely seen outside of their offices (red jackets are for the Supervisors/Pit Managers)—and you are looking at people who have been with the organization their whole lives and has probably never touched a computer in that same period of time.

There is no casino manager under the SJM system for individual properties. Rather, a regional manager controls 3-4 properties and roams between them at leisure. If your property is in the same region as another one belonging to either a buddy of Stanley Ho (e.g. David Chow of Pharoah’s Palace Casino), or, even worse, Wife No. 4 (Crystal Palace Casino or Louvre Casino), you are last on the regional manager’s list in terms of getting sufficient dealers or any other support.

Franchisee quibbles
There was the classic example relayed to me by a fellow colleague who was involved in one of the franchisees (property owned by individuals, casino managed by SJM under the 40:40:20 rule) where it took 8 weeks to replace a gaming table layout, a task that takes 15 minutes in any other casino. As he explained, the owner’s rep has to put in a request to the SJM shift manager to change the table layouts. The shift manager may—after several proddings—then pass on the request to the regional manager. The regional manager would, after a fashion, then recommend the replacements to head-office, which if it approves them, would then place the order with the supplier (SJM does not carry stocks, or at least that’s what my colleague was informed). The supplier takes about 3 weeks to print out a batch, then sends them to headoffice who would then pass them down to the individual property. The story does not end there. Upon receiving the new layouts, the shift manager then has to contact another department in head-office to this time request the maintenance team to come out and install the layout, and this last activity would take another 2 weeks.

I’ve heard if you want other supplementary facilities installed like a Forex desk or a Credit Card counter, you are entering another realm altogether. Apparently, each part of SJM is controlled by a different family of Stanley Ho (read different wife). If you wanted to replace the SJM security guards with an outside independent contractor, it is possible your wish would not be fulfilled as a mysterious phone call is made to your desired external sub-contractor who will quietly inform you your business is no longer wanted. House-keeping belongs to another family member, and treasury likewise. Each arm of SJM operates almost completely as totally separate companies, and the franchisee has to have very good relationships with each and every one of the family members or have a good strong contact inside the top echelons of SJM who can lobby on their behalf.

Stanley Ho to his credit realized that his organisation was unable to deal with the new competition so he brought in Frank McFadden (ex-head of the incredibly popular Sands Macau, as COO of Venetian Macau) to hopefully stir things up a bit.

Frank went in thinking he could smarten things up a bit until he hit the old guard, and the result is a cheap copy of Sands called the Grand Lisboa. Almost every professional observer who has gone in has emerged unimpressed, and that has just been by the look of the place. On the operations side, there are reports of a dual reporting structure with the westerners on one side, and the old SJM diehards on the other. Two virtual management structures operating in parallel with very little communication between the two, from dealers all the way up to the senior executives.

Talking about dual reports, strong rumors abound of another East meets West management schism, this time over in Taipa. The current structure of the No. 1 reporting to Melco, the No. 2 reporting to PBL, the No. 3 to Melco, No. 4 to PBL, and so forth, sounds like a recipe for another disaster in the making.

Wonder what this portends for the last remaining East-West JV in the form of MGM Grand Paradise Ltd?

Anyway, I digress. None of the other SJM properties stand out in terms of attractiveness to the punters, yet their ROI is another matter given the puny capital that would have been invested. The only nice thing about the Grand Lisboa is the massive external domed LED display which makes up the podium façade, and definitely catches one’s attention. Apart from that, their VIP rooms should not have been commissioned at all, and the uniforms of the dealers—someone must have drawn their inspiration from the former East German secret service (one might conclude only a family member has the clout to get that design approved).

Galaxy Gripes
Then there are the Galaxy City Clubs. Talk about being neither here nor there. Apart from the Grand Waldo, the others are converted office blocks and the only noteworthy thing you can say about them is the constant change in their ownership. As for the Grand Waldo with their now defunct live Thai adult performances complete with Ping-pong balls and, let me see if I can get this name right: “Topless Papaya Bar”?, the mind boggles as to their target market. Someone over there must have spent too much time in Patpong Road, Bangkok. Grand Waldo is so quiet you can drive a truck through the main hall and not hit any real customers (we don’t count bussed in zero-cost package tourists as players).

Galaxy Starworld itself is an interesting case study in how not to rush a building without the proper engineering study. It has surfaced in a recent corruption court case that the StarWorld building has sunk below its original height after opening in November 2006, and despite that, the final approval was granted just before Macau’s former Secretary of Public Works was arrested on corruption charges.

StarWorld’s main feature attraction appears to be the lady-boys jiggling away in the ground floor lobby and the towering female hosts ushering guests into the elevators.
Best of the rest

Then there is Sands, Wynn, Crown and now MGM.

Given the last has only just open, it’s still early days yet, and it appear not to have done anything wrong or of noteworthiness, so I will come back to it in a later issue.

Sands is still drawing them in, being the closest big main hall to the ferry terminal. The people who used to run from the ferry terminal to the floating palace and Jai Alai have relocated to Sands, so its biggest drawcard is its location [although the Editor believes Sands’ revolutionary stadium-style design is the biggest factor behind its success]. Sands also set new standards for high ceilings and a loud open-market like gaming hall— something which Las Vegas Sands Corp have replicated at the Venetian.

Wynn attracts the better-heeled main hall players with its more elegant yet muted interior design, and its ground floor café, despite the atrocious service (from many, many visits), is still the preferred meeting place for most international visitors as it is the most convenient in terms of access (no other property appears to have factored in a lobby café which is of decent international standard).

Crown, with its sophisticated chic, has been rated by most competing gaming managers as very ‘cool’, but then again those rival managers are not exactly the desired customers. The subdued lighting, the dark brooding elevators plus ultra-chic restaurants have attracted mainly corporate clientèle, but does not appear to have succeeded too well with the players. They are the only ones to have tried local mail-drops, match-plays and free slot credits, and heavy standalone promotion of their restaurants—all tried and true mass market tools oft used in Crown’s Melbourne hometown, except the target mix here in Macau is not quite the same. Then again, the little old ladies who used to perform their daily arbitrage weren’t complaining. They would jump on the bus from the Border, go into Crown in pairs, get their HK$50 matchplay, put one on Banker and the other on Player and walk away with a 50% instant profit each, then back to the border again to resume their day job. Can’t say Crown does not do its bit for the locals, can we?

Non-kid-friendly Goliath
The Venetian. Well, it may be the world’s largest but it certainly isn’t the best. Its primarily claim to fame is its pure monstrosity in terms of scale. User friendliness? Try and find a toilet when you are there for the first… or second time. Takes you at least 15 minutes to get there, so you wouldn’t want to leave it till the last minute, would you? Or try and find your room from the hotel reception, with a couple of young kids—who are not allowed to enter the casino that spans much of the ground floor access—in tow.

Insofar as the promised MICE (meetings, incentives, conventions and exhibitions) business is concerned, I believe the official response from the kind folks at the Venetian is: we are booked out for the next 6 months, but we still have space. What? As for the retail section, I believe the tenants are still waiting for the manna to drop down from the blue heavens above—albeit the spray painted version.

And now the verdict
To round it all off and in determining the winner and loser of my inaugural Brickbat and Bouquet Award, the following factors were considered by yours truly (who said this was a democratic poll?): dining facilities, easy access, innovation, customer friendliness, entertainment and overall appeal.

The Brickbat award has to go to the Grand Lisboa for the most unimaginative design and overall user-unfriendliness. I don’t even know why anyone would go in there at all.

The winner of the Bouquet has to be Wynn Macau. It has class, easy access to its dining facilities (but I pity the hotel guests who have to walk through the throngs in their robes to get to the pool), nice gaming area and a very classy feature out front in its dancing fountain.

Octo Chang is the pseudonym of a casino marketing professional with extensive qualifications and background in the gaming industry. Please feel free to forward any amusing anecdotes or observations of the marketing variety to him at  http://www.asgam.com/

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