Portfolio of Kimberly Johans

A collection of articles created during my stint as a journalist at The Macau Daily Times

Woody Kim gives his views on casinos and hospitality

Posted by Kimberly on June 7, 2007

By Kimberly Johans
Published in The Macau Daily Times
June 7, 200, page 4 (853 pages)

Macau casinos’ financial chiefs gathered over two days to hear 43-year-old Associate Professor Woody Kim speak about hospitality financial management.
The seminar, which ended yesterday, was hosted by the Institute for Tourism Studies in an effort to assist managers, executives and professionals to better understand and manage the profitability of their casinos.
Professor Kim’s experience in this area stems from his Directorship at the Hospitality Research Centre in the Dedman School of Hospitality at Florida State University, where his research covers diverse areas within hospitality financial management and services marketing.
The vast majority of those that attended were from the soon-to-be-launched Venetian and Sands casinos as well as the SJM group, of which Lisboa is the biggest.
“I read an article about the booming casino development in Macau.
“Because the success of a gaming resort can be evaluated by the bottom line profit, it is critical for casino managers to be knowledgeable of revenue maximisation or profit maximisation.
“This program helps non-financial managers to understand the basics of financial knowledge which is necessary to understand the financial aspects of casino operation,” he said.
He added that, in his opinion, Macau needed more experts in casino development and hotel investment. While impressive facilities were an important starting point effective management skills and sophisticated software were important assets in enhancing and maintaining the service quality of customers with higher expectations.
One of the topics covered explained the concept of revenue management, widely used in airlines, rental car companies, restaurants and cruise lines in the US.
“Understanding the concept of revenue management will help maximise a casino operator’s revenue.
“Adopting this system will help evaluate groups and make recommendations based on the forecasted demand,” he said.
“We are trying to sell the same product to different customers at different prices,” where he gives the example of business travellers as opposed to student travellers. With such different needs and restrictions, time for business people and money for students, hotels need to consider all the various groups and their relative factors when setting room rates.
He adds that there is a marked difference between the casino industries of Las Vegas and Macau.
“A lot of high rollers are here but in Vegas it’s more a mass market.
“One interesting thing you can find is that they have a lot of games tables here but if you go to Vegas there’s the opposite. In Vegas there are probably more slot machines and only a few tables for high rollers.
“Here is exactly the opposite so that’s why if they want to invite or attract more tourists from Europe or America, probably not a lot of them are really high rollers so the casinos need to provide more entertainment or other conventions so they will come,” he said.
“I think eventually, the casinos will have to expand their market because relying only on a few markets for diversification purposes is no good.
“You never know what will happen with regulations and planning especially from Mainland China. They need to check more on mass tourists,” he said, adding that a 70/30 ratio of high rollers against mass market gamers would be a more healthy, desirable goal in the long term.
Asked whether he thought Macau was able to compete with Las Vegas in regards to convention facilities, he said “Macau does not have that reputation at this point so I don’t think they can compete with those same types of conventions.”
To attract more diversification, casinos like The Venetian are being built to accommodate the hopefully high level of conventions they expect to host.
But there are weaknesses within Macau that Professor Kim feels are difficult to overcome.
“One of the major weaknesses in that sense is that it’s an island. the other one I think is traffic patterns because you can only come in via air or by ferries. But that is limited to countries like Hong Kong or mainland China,” he said.
Another weakness he sees is with Macau’s airport infrastructure.
“The airport in very small. Vegas is different. Now the airport [in Vegas] is one of the top three with the highest traffic. That means a lot of people are flying in directly to Vegas from foreign countries,” he said.
His concern is whether Macau could handle such high volumes of gamers.
Asked about the lack of originality with some casinos, in particular Wynn’s and The Venetian, to their Las Vegas counterparts, Professor Kim agrees that “if they could have done it in a different way I think that would have been a much better idea, giving some unique image not just copying Vegas,” adding that cost-efficiency was a likely factor.
“They may have thought about a new image but they would take a long time to design it,” he said. After all, in this industry, time is money.
With Professor Kim having delivered a research proposal to investigate the economic impact of casino tourists in Macau, he hopes the tourism board will be able to use the results.
“They can have a better idea which segment is more profitable and how to approach their marketing,” he said.

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