Sheldon Adelson began tightening the knot that ties casinos to MICE in 1979 when he established the first Computer Dealers Exposition (COMDEX) at the MGM Grand in Las Vegas.
COMDEX went on to star as “the show that put the tradeshow industry on the business pages”, pulling in 200,000 attendees at its peak. Las Vegas evolved into the top US MICE and tourism destination, which continues to prosper while other American cities fade. As for Mr Adelson, he took command of the famous Las Vegas Sands (LVS) casino, built the all-suite Venetian casino and hotel complex and became America’s third wealthiest man.
At the turn of the millennium, Mr Adelson shipped the secret of his success, ‘the Las Vegas Lesson’ across the Pacific to Macau. It wasn’t his exhibition organising skills alone that prompted the move. Legalised gaming didn’t necessarily lead the list of lures. LVS’ hospitality, entertainment and casino expertise coupled with a solid background in hosting business events wasn’t the sole criteria that triggered the multi-billion-dollar investment into Macau’s Cotai Strip.
The key, according to Mr Adelson, is strategically combining non-casino tourism services and facilities with entertainment and gaming attractions to create a tourism and convention destination that provides a memorable and unrivalled experience.
“By providing unparalleled resort, recreation and convention amenities, Macau and (nearby) Zuhai can reap the rewards of the same strategy that has made Las Vegas the world’s top travel and tourism destination,” Mr Adelson said during the 2005 signing ceremony to develop Hengquin Island into an integrated resort (IR), the cornerstone of Mr Adelson’s philosophy.
Still, a singular link appears to exist between gaming and MICE, and this includes destinations outside Las Vegas and Macau. Singapore has a well-established and growing MICE trade, yet it recently brought in LVS to develop the Marina Bay Sands into an IR that includes gaming, an activity new to the island nation. Australia too has a solid gambling industry and a firm MICE trade.
So how closely related are MICE and gaming, and is the rise in Asian casinos a threat to Australia’s MICE trade? Who would the big money bet on? Who would Mr Adelson consult?
Merrill Lynch gaming analyst Daniel Renshaw says, “We didn’t used to consider the (MICE) relationship until LVS decided that Vegas needed to more strongly promote its merits as a convention location, and it began investing in conventions, suites and other non-gaming attractions.
“As a result, Las Vegas revenues are now 55 per cent/45 per cent gaming/non-gaming from the previous 80/20 split. Outside of Australia and New Zealand the two industries are very closely aligned, and Macau and Singapore will be strongly promoting their convention appeal. Singapore, with its cleaner image, has an advantage here.”
Credit Suisse gaming analyst Larry Gandler agrees.
“Las Vegas Sands has demonstrated that they (MICE and gaming) are very closely related and can be an important driver of casino traffic. Indeed, the Sands might argue that the casino is an important attraction for the convention business,” he says.
Analyst at Deutsche Bank in Sydney, Mark Wilson, further reflects these sentiments.
“The MICE and gaming industries are very closely related as MICE delegates are very likely to visit a casino and gamble,” he says.
“MICE and the travel trade are important in the analysis of gaming as they provide incremental visitation. MICE delegates are also likely to gamble more per person than the average visitor.”
Mr Renshaw places more emphasis on Asia than the Australian MICE market.
“For us, Asian MICE carries more weight and is part of trying to assess the level of gaming demand: the MICE visitor who sees a show, shops and plays a little at the table. For Australian gaming, I place little weight on it, as the casinos here are not a major tourist draw for international convention centres.”
Mr Gandler’s gaming analysis also relies less on Australia’s MICE relationship and more on the Asian MICE factor.
“It’s of primary interest when evaluating Las Vegas Sands Corporation which has innovated the concept of incorporating a convention centre right into a hotel/casino. For me, MICE travel is just one of the many contributors to visitation. I don’t monitor MICE travel to Macau but do, of course, watch total visitation,” Mr Gandler says.
He raises significant issues in the investigation into how the “Asian Gaming Explosion” will impact the Asian MICE industry. First, LVS’s Integrated Resort concept prompted him to place more focus on MICE in his gaming analyses, but for Macau, he only monitors overall arrivals, most likely because its MICE industry is in its infancy and detailed data doesn’t exist.
A matrix of possibilities overlaps the effects one country’s MICE and gaming picture may have on another, as each one’s situation greatly differs. Macau is now the world’s gaming capital with its casinos raking in US$6.9 billion last year to pass reigning champ Las Vegas, which tallied US$6.6 billion. It’s worth noting that gaming accounts for 70 per cent of Macau’s revenue, mostly due to an astronomic 39 per cent casino tax.
Macau projects its casino revenue will top US$8 billion this year, having taken in US$2.5 billion in Q2 alone. This will come from more than 20 million visitors, more than half of who arrive from Hong Kong or the mainland. Of these, most will visit for leisure, but Macau is now placing more emphasis on MICE with last year’s establishment of a strategic marketing plan and the Macau Business Tourism Centre. LVS’ Venetian Sands and other properties on the Cotai Strip have let their actions speak for their investment sentiments concerning Macau’s MICE future.
Jonathan Galaviz, partner at Globalysis, says Macau will continue its transformation into a holistic leisure tourism destination in 2007.
“We believe that Macau’s casino gaming revenue in 2007 will be driven by substantial growth in non-casino amenities such as new convention centre venues and innovative entertainment options incorporated into Macau’s fresh Las Vegas-style integrated resorts,” he says.
Singapore welcomed 9.7 million arrivals in 2006 and expects more than 10 million this year, 25 per cent of who are MICE visitors, placing Southeast Asia’s MICE crown firmly on Singapore’s head.
None of this success was brought about by gaming, but the island recently granted two gambling licenses with casino taxes set at a low five per cent. One of these permits went to LVS, which is spending US$3.6 billion on the massive Marina Bay project that incorporates a casino and a 2500-room hotel and convention centre… in other words, an IR. Price Waterhouse projects Singapore’s gaming revenue could reach US$2.2 billion by 2011 based on its two casinos.
Singapore’s reason for bringing in gambling is to increase tourism revenue, which would add to its annual US$2.63 billion MICE receipts. Macau has plenty of casino cash and is now seeking MICE money. Both are looking at the same vehicle – the Las Vegas Lesson – to drive them to their divergent goals.
Australia, the possible victim of the Asian gaming explosion, may not take a hit at all. For starters, it has a well-established, well-distributed gaming industry of 13 casinos which raked in over US$30 billion last year, according to the Australian Casino Association. Melbourne Convention and Visitors Bureau chief executive officer Sandra Chipchase says Australian business events attract 11.9 million delegates per year and they spend US$9.67 billion.
Last year, Australia welcomed 633,000 foreign business arrivals, 11 per cent of the country’s total, and a 32 per cent jump over the past 10 years according to the Australia Bureau of Statistics.
Further, the IR concept is not new to Australia. Melbourne’s 10-year-old Crown Entertainment Complex controlled by the powerful Packer family watches 12 million visitors walk through its doors every year. Crown is also involved in two casino resort complexes in Macau and one in Las Vegas.
It doesn’t appear that gaming is a critical deciding factor when selecting a MICE destination in spite of their close connection. As such, Australia, with its own gaming and MICE success, seems safe at the moment. But with the proliferation of flashy new Asian IRs that include casinos, and the Asian gaming explosion, should Australian MICE be concerned?
Event organisers select destinations and venues for a variety of reasons. Cost, facilities, infrastructure and convenience of location rank high on the list. The other main factor in selling a location is the availability and range of activities. Australia abounds in attractions that it uses to help lure MICE. Gaming is not a significant one.
Macau is a leisure destination planted off the coast of China’s commercial hub surrounding the Pearl River Delta. Chinese and Hong Kong visitors, as well as foreign arrivals, mainly visit for casinos and culture. Currently, MICE is not a factor in Macau, but it is in Hong Kong, as that’s the region’s business centre and the natural home for its MICE.
Singapore is also a business centre, with a thriving MICE trade. The addition of gambling, like its golf courses and other amusements, is mainly a tourism draw.
The relationship between gaming and MICE is only a part of a bigger picture, that of the connection between MICE and leisure travel. Australia has effectively used this combination to build a prosperous MICE trade without relying on gaming. Macau is counting on its thriving leisure trade to lure MICE visitors. Singapore is bringing gaming into the equation, but it’s not aimed solely at pulling in more MICE delegates.
Whatever happens, the relationship between gambling and MICE will be an interesting one to watch over the next decade.
• Las Vegas has evolved into the top US MICE destination and tourism mecca.
• Macau is now the world gaming capital in terms of revenue from gambling.
• MICE and gaming are closely related and can be an important factor in driving casino traffic.
• Price Waterhouse projects Singapore’s gaming revenue could reach US$2.2 billion by 2011 based on its two casinos.
• Australia may not suffer from the casino explosion in Asia.
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