IRs in Asia – drivers for tourism and economic development

In a panel discussion held at the recent SiGMA Asia 2023 International Summit, stakeholders came together to discuss the role of Integrated Resort Casinos (IRs) in Asian destinations as a driving force for tourism and economic development. Moderating the panel was Chris Rogers, Founder and CEO, 113 East limited. The panel speakers were Dr Manida Lau, vice President of business solutions & premium marketing operations of Okada in Manila, Angel Sueiro, COO of PH Resorts and José Carlos Matias, CEO of Project Asia Corp

IRs defined – different perspectives

Chris Rogers kicked off the panel by asking each speaker to give a definition of IRs from their professional perspective. Manida Lau commented that an Integrated Resort (IR) brings everything in one place, “a place for the family to come together”, where there is something for people of all ages. According to Lau, 50 years ago, tourists who visited Macau were labelled as gamblers since casinos were the sole attraction. Fast forward to today and nowadays, when tourists flock to Macau or the Philippines, it is not easy to tell whether they come for gaming or non-gaming reasons, because IRs cater for both.

Angel Sueiro added the financial context and defined an IR as the place where people “can spend their disposable income”, with gaming as the main revenue generator. José Carlos Matias defined an IR from the perspective of an observer from the media industry in Macau, specifically as IRs as the drivers for economic diversification.

IRs in Asia as drivers for economic diversification

Rogers reiterated that despite the efforts happening in Macau to divert the focus from gaming to non-gaming activities, “the reason why everyone is in the market is gaming” and gaming is the driving factor and indeed the reason why IRs exist in the first place. He mentioned Macau’s transformation over 50 years from a “sleepy fishing village” to the success story it is today, and how it is understandable that the Macau SAR government “wants to reposition Macau as a tourism destination”. Sueiro added that “IRs help to raise the quality standards,” and the revenue generated by casinos allows a level of investment that would be impossible to do in other ways.

Matias adds that in the case of Macau, the focus of the new 10-year plan is “about non-gaming investment in non-gaming projects.” He compared the current focus to pre-Covid revenue, where 90% was gaming-generated, adding that currently, under the new plan, the situation is quite the opposite. Matias specified that of the “$14.8 billion US dollar commitment made by the six gaming operators, ninety percent is allocated to non-gaming and 10 to gaming”, which includes diverse foci such as international tourism, MICE, entertainment, sporting events, Arts and Culture, health, and others. What has made this possible is the success of the gaming industry in Macau, and such plans for diversification are only possible because they ride on the success story that is gaming in Macau.

The contribution that an IR in Asia makes to tourism and a location’s economic development is to lay the foundations. Rogers added that the development of an IR means taking the commercial risk of entering an untapped market, building a profitable establishment and, as such, contributing to create a brand upon which tourism and economic development can flourish. IRs are “able to build quality offerings around entertainment, whether that’s a small theatre or a big theatre or be able to bring in talent to perform and Macau is a classic example”. The success of IRs has contributed to placing Macau on the map and on the radar of an ever-growing number of international tourists.

IRs as catalysts of change

According to Sueiro, the role of IRs is that of a “catalyst for the transition of cities from one particular city model to another”. He brings in the example of Las Vegas, which evolved from being a gambling destination to one where 50% of the revenue is non-gaming generated. He added that just a few years ago, few would have considered Manila as a major tourist destination. However, tourists are now recognizing what the Philippines have to offer because of the branding generated by IRs, and perhaps a Taylor Swift concert in Singapore would not have been possible without the presence of successful IRs in Asia such as the Marina Bay.

IRs and ESG

Another important role that IRs play is in their environmental, social and governance commitments (ESG). For instance, an IR’s procurement policy for acquiring goods and services can hugely impact local SMEs, according to Matias. He added that IRs have a role to play in nurturing start-up companies and contributing handsomely to government coffers from GGR (gross gaming revenue).

Negative Impact of IRs

Few would deny the reality of addiction to illegal gambling in most parts of the world. The development of IRs provides further opportunities and choices for people to gamble, potentially increasing the chances of addiction, albeit to legal gambling. This, according to Lau, is a major pitfall of IRs, which Rogers turned on its head when he commented that responsible gaming efforts work “extremely hard” to protect people.

For Sueiro, the negative impact of IRs stems from the disruption caused in the immediate and short term. This happens every time a big player comes on the scene and smaller operators struggle to survive and eventually only the fittest survive. Matias reiterated this point by bringing the example of Macau, where the tourism recovery in Macau post-pandemic does not trickle all the way down to the smaller business, who survive off the crumbs left behind by IRs, including small catering establishments, supermarkets or small business that operate in residential areas away from tourist spots. Furthermore, Matias added the pitfalls of the ecological footprint and urban impact of the “mammoth-scale properties” that are IRs. Rogers rounded up the segment of the discussion by recounting how local staff at IRs generally agree that they prefer Macau before the fast-paced lifestyle inevitably brought about by the resorts, as life “was slower and they could take their time and they knew what they were getting”.

There are tremendous economic benefits in Macau and other areas generated by the development of IRs – better wages, better education prospects and more opportunities in general. If one where to put the pros and cons of IRs, the balance would surely tip in favour.

The future for IRs in Asia

To conclude with Sueiro’s comment “we’ve been working under a fantastic business model but that doesn’t mean that it will still work again well… we need to embrace change and we need to embrace innovation.” Sueiro stresses the importance of constantly striving to attract and retain different demographics. Matias stresses the importance of “adjusting to the new consumer, the new patterns of consumption” and being relevant to “younger generations and new demographics”.

SiGMA’s regional summit in Limassol, Cyprus

SiGMA Balkans/CIS is less than two weeks away. It will be held at the City of Dreams, Europe’s first integrated resort from the 04 – 07 September.

Industry operators will be able to connect with leading affiliates and two conference stages will feature a number of high-profile guest speakers. There will also be an expo floor, including the SiGMA Startup Village. So much more is happening in Limassol! Check out all the details here.