Abstract
For the past two decades, Macao’s casino industry has become increasingly competitive, with patronage and the city’s extraordinary casino revenue secured by Mainland Chinese visitation. Over 60% of Macao’s gaming revenues are now generated from The Cotai Strip’s integrated resorts (IRs) where the presentation of products and services to best create and grow IR Chinese patronage is increasingly critical. The findings of this servicescape study conducted at Cotai’s IRs on Chinese mass market visitors revealed that IR layout and ambience conditions, as well as food and beverage elements, could be used to encourage IR patronage. Casino operations, rewards and luck were components that could induce a repeat visit to the IR or even a competing IR on the respondent’s return visit to Macao. The implications are significant for casino operators and destination marketing given the limited insight in the servicescape literature on the IR environment including specific attributes to focus on to secure Chinese visitation to the casino complex and Cotai Strip IR cluster.
Keywords
Introduction
This study examines the various Cotai Strip integrated resort (IR) products and services that could influence Chinese mass market visitation, overall satisfaction and the creation of future patronage to the IR. The research isolated specific product and service attributes within Cotai’s IRs that had statistical significance to induce visitation from this Chinese mass market gambler segment, and as such have important implications on the future marketing and operational strategies of Cotai’s IRs. As the world’s leading casino destination in terms of gaming revenues, this study importantly provides strategic insight to Macao’s gaming operators in terms of marketing to the Chinese as well as implications to Macao authorities who remain challenged to diversify the city’s tourism industry beyond gaming. Macao overtook the Las Vegas Strip in terms of gross gaming revenues in 2006, and in 2012, it had surpassed the aggregate gaming revenues of all of the USA’s commercial casinos, securing the city’s title as the global leader in the gaming industry in terms of the revenue (McCartney, 2015). It also reinforced Macao’s economic and tourism reliance on the ongoing success of its casino industry. The Cotai IR is tasked to determine those gaming and non-gaming products and services that offer greatest potential for patronage and to induce spending particularly within the casino, the IR’s key revenue generating source. The issue of patronage source is especially important for Macao’s gaming industry as over two-thirds of total visitation to Macao is from Mainland China (Macao Statistics and Census Service, 2019a) This study researched mass market visitation as there has been a recent strategic shift from VIP (very important person) casino patronage reliance to ‘mass’ casino customers by Cotai’s IRs. As Chinese VIP gamblers are brought to the casino through junket operators or agents this leads to profit sharing between the casino and agent. Direct mass visitation to the casino means the IR can generate potentially higher profits. This can be as much as 40% on margins from mass market visitors compared to 10% from the VIP customer (Bland, 2018). In 2013, gross gaming revenue (GGR) from VIP play represented US$29.8 billion (66%) of a total Macao GGR of US$45.1 billion. By 2018 this VIP amount had decreased to US$20.8 billion (55%) of a total GGR of US$37.9 billion (Macau Gaming Control Board, 2019). This drop in VIP patronage and revenues was partly due to the corruption crackdown in China (McCartney, 2015), but in addition revealed a new marketing focus by the casinos. Within the mass segment there is ‘premium mass’ or ‘high net worth’ visitors who access high-end deluxe casinos within the IR through private entrances and transportation. As sampling was conducted at general IR entrances, this premium mass market segment was not included in this study.
Developing cues to visitation through servicescape
Some limited casino literature has shown the importance of servicescape and the focus on particular attributes to induce visitation. Lucas’s (2003) study of slot servicescape satisfaction suggested that specific attributes such as casino ambience, navigation around the slot floor, seating comfort, interior decoration and cleanliness all created a positive and significant impact on servicescape satisfaction and therefore the intention to return to that casino. A key casino managerial implication in the study by Lucas (2003) was that while casinos invested in design phases, it was more difficult to obtain continued capital expenditure for servicescape associated upgrades and changes. Lucas (2003) expanded Bitner’s (1992) servicescape work by employing this within a casino slot environment. This study on Cotai’s IRs also developed Bitner’s (1992) servicescape study, taking a greater holistic approach by integrating the several products and services available within the Cotai IR. Unlike Las Vegas, slots in Macao’s casinos generate only a small percentage of total revenues showing the need to expand the investigation beyond slot appeal. In 2016, the year this research was conducted, slot revenue in Macao’s casinos was US$1.4 billion (5%) out of the US$27.9 billion total gross gaming revenues (Macau Gaming Control Board, 2019).
Lio and Rody (2009) developed Lucas’s (2003) research within a Macao casino setting investigating casino servicescape and in particular the impact of aesthetics and emotions on Chinese gambling behaviour. The researchers acknowledged that the concept of high levels of servicescape were still fairly new in China with initial data suggesting that Chinese patrons would gamble longer with enhanced servicescape elements through which greater satisfaction was created. The investigation by Lio and Rody (2009) was restricted though to casino table games patronage. There is some indication in the casino literature that other service dimensions will influence patron satisfaction beyond gambling products within the casino. Back and Lee (2015) found that the failure in particular to provide food variety, signage and more personalised service could create dissatisfaction by customers to Korean casinos, advising for example greater attention to the quality of Japanese and Chinese food as Japanese and Chinese were key customers to Korean casinos.
As well as advancing casino servicescape literature, this study has important practical implications given the increasing competitive environment of Macao’s casino backdrop. There has been a continual shift in total gaming market share held by each of Macao’s six gaming concessions namely Sociedade de Jogos de Macau (SJM), Galaxy Entertainment Group (GEG), Melco, Wynn and MGM. A report by Sanford C. Bernstein Ltd showed that by the end of 2016, SJM had 20.3% of Macao’s gaming market share while Sands, GEG, Melco, Wynn and MGM had 23.7%, 23.1%, 16.2%, 9.1% and 7.5%, respectively (GGRAsia, 2017a). As a monopoly casino operator prior to casino liberalisation in early 2000, SJM had seen its market share continue to shrink considerably. By the end of 2018, SJM’s market share had dropped to 14.9%, a key reason being that SJM has yet to open on The Cotai Strip (Wong, 2019). It is worth nothing that there is an expectation that the SJM IR will open on The Cotai Strip in late 2019. With nearly 65% of Macao’s gross gaming revenues and 60% of 4- and 5-star hotels on The Cotai Strip (Melco, 2018), gaining competitive advantage on this stretch of land and casino cluster will be the key reference to casino success in Macao as it specifically impacts revenues. With each casino operator competing for essentially the same travel audience, namely Mainland Chinese, the products and marketing used by the IRs to attract and encourage repeat visitation will be crucial.
Non-gaming IR marketing campaigns often include details on concerts, retail promotions, food and beverage promotions and other non-gaming events and entertainment offerings. It is an issue of fundamental importance in advertising IRs within China. While IR marketing campaigns with non-gaming elements can be permitted in China, casino marketing is strictly prohibited. Any overt casino marketing efforts in China can and have resulted in the detention and imprisonment of casino marketing staff (GGRAsia, 2016). The implications of this research are also far reaching as casinos regionally and globally aspire for more high net worth mass Chinese patronage. Jurisdictions such as Singapore with only two IRs achieved US$4.2 billion in gross gaming revenues in 2013 just behind the total casino revenues from the several Las Vegas Strip casinos. Mainland Chinese visitors are a key targeted and growing audience for Singapore’s two IRs (McCartney, 2016).
All in! – Macao’s ongoing reliance on Chinese outbound
From the total of 31 million visitors to Macao in 2016 when the data for this study were collected, 20.5 million (66%) were Mainland Chinese visitors (Macao Statistics and Census Service, 2019a). By 2018 this had increased to 25.3 million (71%) of the total 35.8 million arrivals (Macao Statistics and Census Service, 2019a). While crucial to Macao’s ongoing tourism and casino success, Chinese outbound tourism is also political. The China Government has the ability to directly or indirectly restrict and limit outbound Chinese visitation to destinations. A corruption crackdown in China saw Macao’s casino industry’s revenues plummeted from 2014 to 2015 with Chinese high rollers deterred from gambling in the enclave (Browne, 2015; McCartney, 2015). The drop in Macao casino revenue from 2014 to 2015 was almost 35% from US$43.9 billion to US$28.9 billion, respectively (Macau Gaming Control Board, 2019).
IR complexes and expansions continue to open on the Cotai Strip creating greater casino supply. The Chinese Government has warned and stated that Macao must diversify beyond gaming into non-gaming offerings (Fraser, 2016). The development and display of non-gaming products and services are therefore important for The Cotai Strip. A key purpose of this study and a strategic consideration for the Macao authorities is on which non-gaming attributes have greatest relevance to advance diversification. By 2015, non-gaming revenues within the Macao casino industry accounted for US$3 billion (9.3%) of overall revenue. After deducting for complimentary non-gaming given to high rollers, this dropped to just 6.2% of overall IR operator revenue (GGRAsia, 2017b). Non-gaming attributes such as accommodation, event and food, while not creating direct revenues, also provide crucial free of charge attributes known as ‘comps’ in the casino industry to attract high net worth Chinese to the IR properties. The provision of multiple non-gaming offerings goes beyond competitive manoeuvring, but also portrays Cotai as having potential for greater hospitality diversity beyond gaming.
Macao’s tourism product diversification efforts
In recent years the Macao Government has published various planning documents aimed at diversifying the economy beyond gaming with the development of non-gaming industries and in particular cultural products. A principal guiding document was the Macao Government’s Five-Year Development Plan (2016–2020) which promoted ‘moderate economic diversification’ with a goal of increasing non-gaming from 6.6% of total revenue in 2014 to over 9% by 2020. To do this, the government stated it would encourage the casino operators to focus more on areas such as leisure, conventions and exhibitions as well as an entertainment environment to create greater international appeal (Macao Special Administrative Region, 2016). As previously stated, the goal of 9% was surpassed in 2015.
In 2018, UNESCO designated Macao as a Creative City of Gastronomy, harnessing and promoting Macanese fusion cuisine as a tourism attraction. As well as promoting Macao’s cultural diversity, gastronomy is seen as a means to bring about greater sustainable economic growth to the city (UNESCO, 2019). The cultural and creative industries remain a key focus of development by the Macao Government. Supported by the Government’s Provisional Municipal Council of Macao and Macao Cultural Affairs Bureau, the Macao Cultural and Creative Industries sector was created and now receives several subsidies and event fund in areas such as visual arts, film and song production, performing arts, fashion and animation. To attract non-gaming tourism audiences, the annual International Film Festival & Awards, Macao, started in 2016 and also features several local films in the schedule. The annual Macao Arts Festival and Macao International Music Festival both integrate local artists and are promoted as part of Macao’s tourism offerings (McCartney and Ip, 2018).
Chinese casino patronage – Creating the favourable IR environment
As Huang and Wei (2017) note there is already a substantial and growing body of literature on outbound Chinese tourists examining various issues such as motivation, revisit intention, travel behaviours and attitudes. As can be seen from Table 1, Macao and its casinos have become increasingly reliance on Chinese visitation. In 2008 of the 22.9 million visitors to Macao, 11.6 million (51%) were from China. By 2017 this had doubled to 22.2 million Chinese tourists, and almost 70% of the total 32.6 million tourists. After the corruption crackdown in China, 2017 showed signs of recovery and growth in both casino revenues and Chinese visitation. A reflection of the difference in gambling preferences between Chinese and Westerner tourists can be seen with casino table and slot play. Unlike Las Vegas were slots provide most of the casino revenue, slots in Macao produced US$0.71 billion (5%) of the total US$13.6 casino revenue in 2008. Slot revenue increased to US1.65 billion in 2017, but still remained at 5% of total gaming revenue in Macao. The number of casino tables has increased as more casinos opened in Macao. As shown in Table 1, between 2008 and 2017, the number of casino tables increased by 37% from 4017 to 6419. In 2012, casino table growth was capped by the Macao Government at 5500 tables, with table growth thereafter for at least the next 10 years to be no more than 3% per year (Macau Business, 2011). It was a measure meant to quell some of the extraordinary gambling revenue growth and spending essentially by Chinese gamblers.
Macao visitor and gambling data (2008–2017).
The data in Table 1 show the precipitous nature of Macao’s tourism development in terms of Chinese visitor growth and subsequent revenue increases. The decline in gaming revenues confirms that the casino industry can be negatively impacted by external risks such as the Chinese Government policy. This has created a highly competitive casino landscape on The Cotai Strip. While this research dates to 2016, the study presents for the first time an IR marketing framework which can be replicated utilising servicescape to select specific attributes as messages and images to gain competitive edge.
Literature review
Governments often bestow comparative position upon casinos, as is the case with Macao. In order to legally gamble in a casino, the Chinese are mostly compelled to visit Macao or other jurisdictions with land-based casino IRs in close proximity to China such as Singapore and the Philippines. However, competitive themed tourism and hospitality literature has emphasised that having a catalogue of well-documented and maintained resources is not sufficient, although a necessary first step in the tourism competitiveness process. It is through the strategic placement of resources that competitive advantage can be achieved (Crouch and Ritchie, 1999). Tactical considerations should be put in place. In the context of an IR, specific gaming and non-gaming products and services should be isolated as key attributes that can influence IR choice. Servicescape literature to date has looked at various sectors of the IR such as the casino or slot environment or the food and beverage offerings. This research consolidates for the first time the literature on servicescape and hospitality products to provide a more detailed analysis on attribute selection around which marketing messaging and imagery to attract Chinese visitation to an IR can be created.
Casino servicescape and customer satisfaction
This study adopted a similar approach as Heung (2000) in terms of methodology. After a factor analysis of several Hong Kong hotel attraction attributes, Heung (2000) used satisfaction as a key decision factor by Chinese to stay at the hotel. In this study a factor analysis was also conducted on the multiple attributes extracted from the literature and examined on overall relevant importance to the IR visit. Investigating the relative impact of service quality on the Chinese visitor’s intention to revisit a Macao casino, Lo et al. (2013) used the revisit intention as a dependent variable. The intention to revisit the IR was also used as a factor in this study.
A challenge for Macao’s tourism and hospitality industry is to stay competitive given the rising appeal and awareness of other gaming and non-gaming focused destinations by outbound Chinese. The hospitality environment or servicescape has been widely used to determine user satisfaction (Bitner, 1992; Wakefield and Blodgett, 1996). Acknowledging little is known on whether and how servicescape affects customer satisfaction in a casino setting, Lam et al. (2011) adapted servicescape and included an assessment of physical surroundings of ambience, navigation, seating comfort, interior décor and cleanliness as factors that could influence gaming satisfaction. Staff service has also been shown in gaming literature to influence visitors. Stating that their research was the first to be conducted on the servicescape of the UK gambling industry, Cockrill et al. (2008) highlighted the importance of staff in attracting and retaining customers. An important recommendation in their research was the need to shift focus and resources to staff recruitment and training rather than solely servicescape attributes. In the case of Macao’s large IR settings, there may be multiple interactions and service encounters by patrons with resort staff. As such, servicescape elements used by Lam et al. (2011) and Cockrill et al. (2008) to examine customer satisfaction were included in this study.
IR casino floor
An IR has multiple gaming and non-gaming components all under one roof. Wong and Fong (2012) modified service quality in a casino environment to incorporate table games and slots as part of service experience. As shown in Table 1, Macao’s casinos and essentially the casino tables, yield considerably higher revenue volumes than Las Vegas. Almost 90% of total gaming revenues in Macao come from the table game Baccarat produces (Macau Gaming Control Board, 2019). This preference for table games is an important consideration in casino marketing to Chinese audiences.
Some attributes are distinct to the Macao casino environment such as the possibility to smoke as well as the concept of gambling luck by Chinese casino patrons. Being omitted from previous servicescape studies on Macao’s casinos, these two key features were importantly included in this study. When examining attributes that influenced customer retention at casinos, Wakefield and Blodgett (1996) included in their findings the importance of floor layout, facility aesthetics, seating comfort, facility cleanliness and electronic equipment and displays. All these attributes were found to be significant factors to encourage length of stay, casino choice and repeat visits. The issue of smoking on the casino floor was missing from the research by Wakefield and Blodgett (1996). With a large smoking population in China, it is reasonable to assume that there will be a higher than average number of casino customers smoking in Macao’s casino (Wan and Pilkington, 2009). A recent non-smoking law on mass casino floors has led to the construction of smoking lounges on the casino floors (McCartney, 2016). Chinese gambling is also heavily grounded in luck and ‘fung shui’ (Ozorio and Fong, 2004). ‘Fung shui’ is a critical factor for Asian gamblers (Hobson, 1995) in that gamblers have some level of perceived control over the outcomes. In observing Baccarat players in a Macao casino, Lam (2007) found the players had an illusion of a level of control on the outcome of the game.
IR non-gaming attributes
Prior research on hospitality servicescape has postulated the possibility of various products and services influencing customers satisfaction levels such as food and beverage, retail, events and entertainment. Food and beverage quality and variety were concluded as important to Mainland Chinese satisfaction levels staying at Hong Kong hotels (Heung, 2000). Further studies on Chinese visitation to Hong Kong has shown the importance and prominence of shopping as a key motive for visiting, with factors such as price, brand choice and in-store environment judgment features (Choi et al., 2008).
Non-gaming amenities can also create spillover to the casino to produce significant visitor volumes and indirectly benefit gaming revenue volumes. Research on a sample of Las Vegas casinos found a positive correlation between showroom events and gaming volumes (Suh and Lucas, 2011). Events and entertainment are also prominent features of the Cotai IR’s marketing strategy, staged in purposely built venues such as theatres and arenas as well as multiple locations throughout the IR including the casino floor or retail mall (McCartney, 2017).
Patrons to Cotai’s IRs are often incentivised and rewarded with gaming and non-gaming attributes through a loyalty and reward program. Barsky and Tzolov (2010) cautioned that loyalty programs should be targeted at selected customer groups in order to leverage their effectiveness to change patron attitudes and behaviour. With an increasing marketing focus by casinos on loyalty club programmes due to rising competition, Palmer and Mahoney (2013) warned on the effectiveness of casino loyalty programs in stimulating and building loyalty with more understanding needed on specific patron group expectations and responses to loyalty club tactics.
This research recognises that the casino is housed within a broader offering of multiple products and services within an IR and, as such, other attributes could be having an impact on repeat visitation. This study is an initial step in not only advancing the literature on IR servicescape but as a direction of future IR servicescape research to provide greater insight into best aligning IR products and services to appeal to specific Chinese visitor groups.
Addressing the research gaps
In some studies, the Macao casino servicescape has solely has been investigated, discounting the possible appeal of IR non-gaming attributes surrounding the casino. Ho et al. (2019) in their research of servicescape and design at Macao’s casinos, considered only casino attributes, providing in their conclusion managerial implications for operators to isolate and market factors to increase casino revenues. Ho et al. (2019) also omitted attributes such as the possibility to smoke and the concept of luck. While concluding that the IR model was an important entertainment venue for Chinese gamblers to Macao, Wan (2012) similarly only examined casino design to attract Chinese patronage using a street survey convenience sample of 25 respondents. Yet with Macao’s most commercially successful casinos within an IR setting, the surrounding non-gaming attractions could influence visitation and length of stay. This research on Macao’s IR servicescape is unique within the literature in that it questioned visitors within the IR complex ensuring that memories of the visit were immediate. The research also advances marketing insight into Macao’s IR by showing that certain servicescape attributes can be strategically targeted based on various demographic and travel behaviour characteristics.
Methodology
Study instrument and sample
Most of Macao’s gaming research has been conducted by street intercept or at border crossings (Liu and Wan, 2011; Wong and Rosenbaum, 2012; Vong and McCartney, 2005). In researching Macao casino servicescape, Ho et al. (2019) asked respondents near a bus station for customers traveling to and from different casinos in Macao and the Cotai Strip. The research required the customer to have gambled within the past 6 hours to have a clearer memory of his or her visit. Lam et al. (2011) research on servicescape to Macao’s IRs interviewed visitors on the casino buses, acknowledging in their research the time limitation to interview each respondent due to the short bus journey. For this research on IR servicescape, data collection permission was obtained from the Cotai Strip IR companies to be conducted at the main IR coach terminals. Security passes were given to the research team to wear to identify them to casino resort security personal. Over 1 week in mid-2016, a total of 325 valid responses were obtained in the five integrated resort complexes on The Cotai Strip. A questionnaire survey was the preferred method to obtain data on Chinese visitors leaving Macao. As only Mainland Chinese were interviewed, a simplified Chinese version was translated from the English wording, and reverse translated to ensure the meaning remained the same. A pilot study was conducted at one of the IR coach stations with only slight amendments to the Chinese characters and a consolidation of a few attraction attributes with similar meaning.
Model variables and questionnaire design
Lam (2007) commented on the importance of players touching cards for luck while Liu and Wan (2011) used the attribute of trying his or her luck as part of the Macao casino experience. In the present study these two attributes were merged to the visitor perception attribute that ‘the IR is lucky’. The questionnaire was divided into four sections. The first screened for those who were Mainland Chinese and over 21 years old, a minimum age requirement to enter the casino. The second part of the questionnaire examined visitor profile, while the third section contained the various attributes. The 19 attributes chosen were consolidated, based on casino and hospitality literature as shown in Table 2. These ranged from gaming centric attributes such as range of slots (Lucas, 2003) and range of table games (Wong and Fong, 2012), to the availability of non-gaming products which included food and beverage (Wong and Fong, 2012), retail (Choi et al., 2008), events and entertainment (McCartney, 2017), as well as aesthetics such as décor and layout (Wakefield and Blodgett, 1996), ambience (Lio and Rody, 2009) and IR cleanliness (Lam et al., 2011). A Likert-type scale of 5 (very much agree) to 1 (very much disagree) was used on the attributes. This scaling was consistent with previous servicescape research (Heung, 2000). The final part of the questionnaire examined visitor satisfaction and revisit intention. A travel behaviour question on the number of times to Macao in the previous year in 2015 was used to examine if the IR patron was a repeat visitor to Macao.
Key attraction attributes (19) and principle literature citation.
Results
Most of the respondents were female (58.8%) and aged 21 to 30 years (55.1%) (Table 2). This gender split is in line with previous studies on mass visitation to Macao’s casino which concluded female and younger patrons to be more numerous than male and older ones (Liu and Wan, 2011). Monthly household income was mostly lower than RMB20,000, an indication and confirmation that the sample was formed of mass Chinese visitors, as opposed to premium mass visitors. Respondents were mostly repeat visitors to Macao, with nearly 75% visiting the jurisdiction at least once in 2015. Most of the visitors were day-trippers not staying in a hotel (66.2%), also in line with previous research findings on Chinese visitors to Macao. Sentiment towards the resort was positive, with many pleased with their overall stay (98.2%), satisfied with their experiences (92.0%) and indicating that they would return to the same resort during their next visit to Macao (85.2%) (Table 3).
Demographic, travel behaviour, satisfaction and future travel intentions of Chinese visitors to Macao (n = 325).
Factor analysis – IR attributes of greatest importance
Statistical analysis was carried out on the attraction attributes (Table 2) via the use of Statistical Package for the Social Sciences (SPSS, version 15.0). A reliability analysis on the data produced a Cronbach alpha value of 0.829 (Table 4). Cronbach alpha results greater than 0.6 will indicate that the number of variables and sample size are adequate (Hair et al., 2008). Therefore, the data collected were deemed reliable. The validity of the data on the attributes (Table 4) was calculated using the Kaiser–Meyer–Olkin (KMO) test of sampling adequacy producing a value of 0.771. Since this was higher than 0.6, the data were factorability adequate. A factor analysis was applied to reduce the attraction attributes and a varimax rotation was conducted to provide a maximum sum of variances of the loadings from the factors. This produced a six-factor solution (Table 4). Each component was renamed as ‘Physical layout and ambience’, ‘Food and beverage’, ‘Casino operations’, ‘Rewards and luck’, ‘Staffing’, and ‘Retail’.
Factor analysis results of attract attributes at the IR (n = 325).
With Eigenvalues above 1.0, the total variance explained from the factor analysis was almost 61%. The physical layout and ambience component explained 25.2% of the variance and included the ease of getting to the IR and events and entertainment at the IR. Component 2, food and beverage, explained 8.5% of the variance and was comprised of food and beverage price, quality and variety. Casino operations (component 3), with 8.1% of the variance, included the range of table games and slots and seating comfort attributes. Most of the casino tables and slot machines at the IR have seats for customers. Rewards and luck (component 4) with 7.4% of the variance included the presence of smoking rooms, while staffing was the fifth component involving issues of prompt service and courteous staff and explaining 6.1% of the variance. Retail which included a variety of retail brands and duty-free pricing attributes was the sixth component explaining 5.5% of the variance.
The second objective of this research investigated whether specific attributes could be aligned to certain Chinese visitor and travel profiles on influencing IR visitation. To do this, a further investigation was conducted on the six components in Table 4 using the independent t-test for gender and ANOVA and post hoc tests on age, monthly income and number of times to Macao in the previous year (2015). The components had no influence on IR visitation based on respondent gender (Table 5). However, the IR’s physical layout and ambience did influence the Chinese visitor sample depending on income (F = 2.507, p = 0.042) (Table 6). The post hoc test showed those Chinese visitors with incomes less than RMB10,000 and more than RMB60,000 rated the physical layout and ambience factor of greater importance than those earning between RMB10,000 and RMB60,000. Physical layout and ambience (F = 2.196, p = 0.015), as well as food and beverage components (F = 3.354, p = 0.000) were found to be more important attributes of influence with repeat visitors.
Attraction factors by gender (n = 325).
Attraction factors by age, income and number of times to Macao in 2015 characteristics (n = 325).
*Statistically significant (≤0.05).
**Statistically significant (≤0.01).
Satisfaction and repeat visitation intention
The final objective of the study assessed overall satisfaction, experiences and whether the respondent would visit this specific IR during their next visit or choose another IR. The responses from overall services and satisfaction of experiences at the IR were tested across all 6 components using an ANOVA to examine if there were any components that could possibly influence IR visitation by the Chinese visitor (Table 7). Casino operations were found to impact overall service (F = 4.528, p = 0.034) and whether the visitor returned to the IR (F = 28.093, p = 0.000).
Attraction factors impact on service expectations, experiences, and repeat visitation to the IR (n = 325).
*Statistically significant (≤0.05).
**Statistically significant (≤0.01).
As shown in Table 7, the rewards and luck factor had an influence on visitor experience (F = 4.086, p = 0.044) and could have an impact on visitors choosing a rival casino first in their following trip to Macao (F = 6.333, p = 0.012).
Discussion and conclusion
With limited previous research on the appeal of Cotai’s IRs by mass Chinese visitation, this initial study is timely and important. Macao has become increasingly reliant on Chinese visitation since the Handover in 1999 and therefore will remain a crucial travel segment in advancing Macao’s tourism and casino industry. The Cotai Strip competitive landscape has also intensified. IR and casino marketing teams are tasked with growing IR appeal throughout China’s major tier cities using appealing non-gaming imagery and messaging. Mainland Chinese travellers have greater destination choice which can include the wish to gamble as part of the travel experience. Larger numbers of Chinese now travel globally. This study reveals important attributes at the Cotai Strip’s IRs to focus attention on to influence visitation and expand Chinese mass visitation.
A factor analysis of 19 attraction attributes produced six key components to examine as a possible focus for IR operations and marketing. These were physical layout and ambience, food and beverage, casino operations, rewards and luck, staffing and retail (Table 4). Physical layout and ambience were shown to be statistically significant depending on household income and the number of times the Chinese respondent had been to Macao. A key aim of the IR is to attract higher income patrons. IR physical layout such as ease of getting to and around the IR, the resort’s layout, directional signage and décor, cleanliness and ambience, as well as event and entertainment, could be issues to study further as actions to specifically influence first time and repeat high-income Chinese visitors.
Casino operations and the range of table games and slots were also important considerations for Chinese visitation. The respondents were mostly repeat patrons, some visiting multiple times since 2015. Maintaining casino floor appeal to first time and repeat customers will be an important distinction. Casino operations were shown to influence overall service perceptions and visitors’ willingness to return to the IR, while rewards and the perception of luck could impact visitor experience and their wish to perhaps visit a second choice IR on their next visit to Macao.
The findings of this study generated practical implications to advance the understanding of servicescape within the IR from a marketing perspective and the framing of more strategic messaging and images to provide greater appeal to the Chinese customer. At a destination level, the Macao authorities are also increasingly challenged to provide products and services that will have greater appeal to Chinese visitors beyond gambling.
Industry implications
IR competitiveness and distinctiveness
The social and physical environment can provide cues for the casino patron to gamble. Providing a consolidation for the first time of several product and service attributes within an IR setting, this study reveals that specific non-gaming factors could be used to influence IR experiences and Chinese mass market visitation such as ambience, rewards, luck, food and beverage (Tables 6 and 7). These could be used as marketing campaign messages and images within Mainland China. This research also achieved a segmentation of patron profiles while linking these to certain attraction attributes. Such a finding will be key as part of IR strategic marketing to potential Chinese visitors.
A managerial and marketing implication and a new finding in the servicescape literature will be ensuring that the casino resort does not underperform on casino operations as well as the rewards strategy and perceptions of luck. As most of the visitors to the Cotai IR were day-trippers, casino marketing and operations are challenged to ensure that the limited time spent in the IR by Chinese visitors is devoted to the one IR, not the competition. The IR also needs to ensure that the casino loyalty, points and gifts reward programme remains attractive compared to the competition’s, and the concept of being lucky at the IR is portrayed adequately and convincingly to the Chinese traveller.
Destination distinctiveness
Macao remains challenged to shift its reliance on a single travel source and their image of a gambling city. Most visitations to Macao are from China, a market that has propelled Macao into global casino leadership in terms of GGR. An increasing number of casino resorts are being built or expanded on The Cotai Strip as well as within the Asian region creating greater casino supply. Thus, Chinese casino travellers have a growing number of gambling opportunities to choose from. It is crucial therefore that Macao’s casino industry maintains and increases Chinese visitation. Marketing collaboration between Macao’s tourism authorities and Cotai’s IRs is required. As much as the Las Vegas Strip has become the destination within the state of Nevada, so too The Cotai Strip needs to make strategic marketing choices to maintain the appeal of the IRs in the longer term. In the casino industry the importance of the lifetime commercial value and positive word of mouth referral worth of a repeat customer is essential. With most of the IR’s patrons repeat Chinese visitors, this research showed the prominence of some key attributes to influence this visitor segment as well as creating appeal to first time visitors. Attraction attributes shown to be significant for both first-time and repeat visitors to The Cotai Strip should be thus taken into consideration for an agreed marketing campaign for The Cotai Strip by both the private and public sectors.
Aligned with the findings about the importance of food as an attraction attribute to the IR particularly with repeat visitors is Macao’s designation as a Creative City of Gastronomy. Food will have several attraction attributes such as quality, price and range. Macao’s destination marketing agency, the Macao Government Tourism Office, should consider not only the marketing and messaging of gastronomy, but also operational and oversight issues. These can include ensuring local restaurants continually provide attractive pricing, quality dishes, and food that can be identified as uniquely Macanese fusion dining.
To 2020 and beyond
Macao has become increasingly reliant on Chinese visitation. By the first quarter of 2019 Mainland Chinese visitation increased to 72.0% of total visitation (Macao Statistics and Census Department, 2019c). While GGR in 2018 increased 14% year on year to US$37.9 billion, by the first quarter of 2019 GGR had declined by 1.6% (Macau Gaming Control Board, 2019). Macao’s casinos are not resilient to revenue decline, yet they continue to expand in Macao. With Macao’s continued overreliance on the casino sector, Sheng and Gu (2018) highlighted the importance of Macao now moving to a Las Vegas model and the promotion of non-gaming developments and sustainable economic growth to include conventions, sporting events and luxurious amenities. The growing body of literature on Chinese outbound traveller has shown the heightened expectations from service delivery such as food and beverage and the attributes of access convenience and gift purchase (Li et al., 2011). Ego enhancement and the ability to experience and learn something new have also been found to be significant motivators for Chinese outbound travel (Hua and Yoo, 2011). However, Chinese travel motives to Macao and Hong Kong was shown to be fairly unique compared to Chinese outbound to foreign countries. Shopping and ease of access were key considerations to visit the two SARs (Special Administrative Regions) compared to sight-seeing or visiting friends and relatives (VFRs) in overseas countries (Xiang, 2013).
The Cotai Strip is an increasingly competitive landscape as IRs expand and open. Consolidating for the first time several product and service attributes within an IR setting, this research reveals that specific non-gaming factors could be used to influence IR experiences and visitation such as ambience, rewards, luck, food and beverage (Tables 6 and 7). These could be used as campaign messaging in Mainland China. Further investigation would be needed to determine those aspects of each attribute of greatest importance to the Chinese patron. Food and beverage, an important part of daily Chinese culture, will have multiple dimensions such as pricing, quality, quantity, presentation, renowned Chinese chefs, restaurant setting from food court to fine dining, and authenticity should IRs present home food restaurants.
The research advanced the discussion on servicescape hospitality literature by integrating several gaming and non-gaming products and services as well as linking their level of importance to specific Chinese travel segments. At a practical and strategic level for casino operators on The Cotai Strip, the research showed the ability to isolate a few products and service attributes to focus on marketing attention. The findings are valuable given the use of non-gaming elements in IR marketing campaigns in China. Casino rivalry and new entrants have created further supply with more discerning Chinese casino patrons, many of whom are well informed of products and promotions given their multiple visits to the Strip. IR management and operators are tasked to identify and invest on products and services that create and maintain the greatest appeal to the Chinese visitor and particularly higher spending customers. Non-gaming requires capital investment and reinvestment to maintain relevance. Some of this investment could include events and entertainment, theatre construction, themed restaurant introduction or a retail mall. A continued monitoring of non-gaming relevance and appeal to the Chinese segment will be important. The justification for non-gaming will also be calculated as part of ‘comp’ on its ability to attract a certain portion of high net worth mass patrons to gamble. As presented in this study, servicescape enquiry can provide further evidence on the attribute’s capability to significantly influence Chinese visitation. As this study sample on Chinese visitors to Cotai’s IRs revealed, the outbound numbers to Macao include multiple visits during the year. Cotai’s IRs need to consider the continuous packing of products and services to maintain the interest of repeat patrons as well as those packages that create first time visitors from Mainland China.
Limitations and future research
This research was conducted over a week across IR properties in Cotai Strip. While the results reveal some significant strategic insight for IR and destination marketing and product development, three areas are suggested to advance this research. Firstly, while effort was made to ensure that the respondent had been at the casino by interviewing on-site, the sample may not have been representative of the mass gambler market to Macao. The premium mass players would not have been included in the sample as private car transportation and deluxe casino access is provided directly to premium casino suites within the integrated resorts. Secondly, due to the time constraint to question, the respondents some attributes were omitted or consolidated. The research did not question spending or share of wallet on gaming and non-gaming in the IR and would be another valuable measurement to link to future servicescape research. The appeal of IR accommodation with several servicescape possibilities could be included in future analysis of IR appeal. Finally, as attraction factors are not static, continuous benchmarking and analysis should be conducted to ensure that the casino resort is delivering on the expectations of the Chinese visitor in maintaining his or her loyalty as well as acquiring new visitation.
Footnotes
Acknowledgements
The preliminary concept and research of this study was presented as a working paper at 15th Asia Pacific CHRIE (APacCHRIE) Conference 2017, Bali, Indonesia. With regard to the paper review process, the author would like to thank the reviewers for their valuable comments and edits to this study.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship and/or publication of this article: Funding was provided for this research by the University of Macau research grant MYRG2015-00206.
