Becky’s Affiliated: Importance of market segmentation & tailored service in Asia

TAGs: aristo international hotel, asia gambling, Asia Market, beckys affiliated, Ben Reichel, donaco international, Editorial, Gaming, GRWA, Lao Cai, Racing and Wagering Australia, Rebecca Liggero

The Gaming, Racing and Wagering Australia (GRWA) conference is coming up and while the focus is mostly on Australia, there will be some discussion on Asia’s goldmine of a gambling market and how to tackle it.

Becky’s Affiliated: Importance of market segmentation & tailored service in AsiaWe keep hearing over and over again at gambling conferences throughout the world that China’s premium mass market is where casinos and integrated resorts should be putting their focus.  This is where the big money is and where the future is going.  Appropriately, GRWA speaker Ben Reichel, Executive Director of Donaco International, plans to deliver a presentation entitled “Attracting China’s premium mass market” on the first day of the event, August 11.

Reichel’s company is behind the newly renovated Aristo International Hotel, a hotel-casino in Northern Vietnam that sits on the border with China’s Yunnan province.  The Aristo property is loaded with “Premium Mass Players” from Yunnan and seeing as gambling is currently illegal for Vietnamese citizens, all of their clientele come from outside the country.

Reichel is an expert on the Asian gambling market and seeing as this is such an important geographical region for our industry, I asked him for a pre-GRWA interview about his upcoming presentation.  I hope you enjoy it.

Becky Liggero: Thank you very much for sharing your expertise with me today, Ben.  You’ve done a great job attracting “VIP” players to your Lao Cai property from Yunnan, what strategies do you have for attracting VIP players from other parts of China?

Ben Reichel: Two of the themes of my presentation are market segmentation, and the importance of individual gaming properties tailoring their service offering to their clientele.  At the Aristo International Hotel in Lao Cai, northern Vietnam, the majority of our business is from what we call VIPs.  However these players would not be regarded as VIPs – or treated as VIPs – in other places, especially Macau.  Our strategy is to target what the larger operators would regard as premium mass players.  With the right property, marketing and management team, it’s possible to generate excellent returns from these players.  And that opportunity is available to junket operators from all over China, some of whom have already started sending players to our brand new property.

BL: Interesting…and smart.  So why would junkets send their VIPs to your property in Vietnam rather than Macau, Manila or Singapore?

BR: There are lots of reasons.  It can be hard to get a visa to Macau, especially for our target market.  And these players are being squeezed out of Macau by the continuing increase in minimum bet sizes there.  Our players want the VIP treatment, which they would not get in Macau or Singapore.  Some players are concerned about safety in the Philippines.  Some Macau junkets are being squeezed out by the larger casino operators, who are looking to target their players directly.  So the junkets are now looking for alternative destinations.  And finally, the Vietnamese regulatory and tax regime makes it possible for us to offer much more attractive commission rates to junkets.  My presentation looks at this in detail.

BL: Excellent.  What plans do you have to attract more of the premium mass market in China?

BR: As noted, our whole strategy has always been based around what other operators call “premium mass” players.  This is the focus of our junket program and our marketing, as well as our property design and quality.

BL: Got it.  Lets talk market segmentation.  What are the main differences in strategy between catering to VIPs and Mass Market?

BR: The expectations around both gaming and non-gaming amenities are obviously different between the two market segments.  Gaming floor layout is important – I have seen casinos in Vietnam that are ostensibly aimed at high rollers, but the floor space is dominated by 1 cent slots. 

Of course access to credit is important for VIPs (Aristo does not offer credit to anyone – players or junkets – but junket operators may choose to offer it to their players).  And bet sizes have to be scaled appropriately.  Effective CRM and loyalty systems are valuable for mass market players. 

On the non-gaming side, amenities such as food, entertainment and leisure can actually be more important for the aspirational mass market.

BL: How do you plan to compete with Macau for the mass market?

BR: Our traditional mass market players are Yunnanese residents, who don’t even need a visa to cross over the extremely busy border to Lao Cai.  In contrast, they do need a visa to go to Macau.  We have only barely scratched the surface of the 46 million people living in Yunnan.  Our other growth opportunity in this segment comes via the deals we have signed with tour operators from all over China, who send close to 2 million Chinese tourists to Vietnam each year.  We are the best and biggest hotel in the Sapa region, which is a very popular tourist destination.  

BL: 46 million- these numbers are simply mind blowing.  In your opinion, what are the chances of Vietnam lifting their casino ban and what would this mean for Aristo’s strategy?

BR: We think that the political will for this to happen is quite strong.  However it may take a few years, and the precise way in which gaming will be opened up to locals is still unclear.  Our strategy at the Aristo is not dependent in any way on local Vietnamese being allowed to gamble.  However if the ban was lifted, it would contribute substantially to our bottom line, as we could fill our gaming hall without needing to pay so much money in junket commissions.

BL: It would truly be an ideal situation.  Is there anything else that you wanted to add?

BR: With the strong growth in the middle class throughout Asia, and their increasing propensity to travel and to spend, together with the improvements in infrastructure in the region – the right property in the right location can make very good money.

BL: Amen to that, Ben.  Thank you so much for your time today and be sure to enjoy your time at GRWA.


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