4/11/2010page Changing times, changing tastes How visitors to Macau are reacting to new supply –...

4/11/2010 page

Changing times, changing tastes

How visitors to Macau are reacting to new supply – and how they are providing clues to the future

for Macau's casino operators

Presentation to Deutche Bank Gaming ConferenceMarina Bay Sands, Singapore

May 13, 2010

4/11/2010 page

The Market

Macau has grown its gaming revenues at warp-speed compared to Vegas, but non-gaming revenues have lagged. Duh! • A year after Venetian opened, our 2008 borders survey showed

visitors did not care about spas, shows, live bands, or fine dining

• Long-distance visitors need hotel rooms, and everyone needs affordable food, but beyond that, it's gaming all the way

• That said, these people have tastes, preferences, and loyalty to brands that reward them. And they are evolving

4/11/2010 page

Who they are

Gaming

With gamer

Other

Primary reason for visit?

Heritage sites 33%

Eat Portuguese food 27%

Spa 1%

Macau Tower 8%

Golf 1%

Go-karts 1%Shows 1%

Live bands 1%Karaoke 3%

Shop at Venetian 10%

Shop at Wynn 3%

Shop at Senado Square 10%

What else will you do here besides gamble?

What they said

• The IR model is working, because size counts

• Word of mouth is everything in marketing

• Promotions can make people move– But these need to be clever and clear

• Strong loyalty to brands exists already– People shop around, but in small circles

• Long way to go in Macau's image evolution

• Casinos have overspent in short-term– Shows, spas, live music uninteresting to Chinese

How we chose them

• Deliberate focus on equal weighting between Guangdong, Rest of China, and Hong Kong– Showed subtle differences in preferences

• High percentage are frequent visitors

1st 16%

2nd 3%

3rd 13%

4th or more 68%

Hongkongers

1st26%

2nd7%

3rd17%

4th or more50%

Guangdongers

1st41%

2nd6%

3rd11%

4th or more43%

Rest of China

How casinos can reach them

• Word of mouth is king

• Internet stronger among younger demographic

Print14%

TV23%

Internet10%

Friend/ Relative50%

Other3%

Overall

0%

2%

4%

6%

8%

10%

12%

14%

16%

Internet

Age 18-30

GDHK ROC

When to hit them

• One-third still undecided AFTER leaving home

• Buses are key for mainland mass-market

Bus86%

Car13%

Flight-Bus2%

How did you get to Gongbei?

Guangdong residents

Bus73%

Car16%

Flight-Bus11%

How did you get to Gongbei?

Rest of China residents

At home

En route

On arrival

When did you choose your casino?

Venetian brand kicks butt

• Pre-COD, 12 months after world's biggest IR opens:

HK GD ROC

0%

10%

20%

30%

40%

50%

60%

Which is your favorite casino?

SandsWynnStarworldLisboasMGMVenetianOther

Demographics differ ...

• Wynn has spenders, Lisboas have Stanley

• Venetian has youth

Wynn Lisboas Venetian

0%

10%

20%

30%

40%

50%

60%

Give us your cash

GD avg

GD 40-50

Wynn Lisboas MGM

5%

7%

9%

11%

13%

15%

17%

Give us your loyalty

Overall avg

ROC avg

Wynn Lisboas Venetian

0%

10%

20%

30%

40%

50%

60%

70%

Give us your young

GD avg

GD 18-30

… but favorites are set

How well do you know these casinos?

Been to each one before

Only been to a few but know a

bit about the others

Know very little about the ones

not on my list to visit

Of Total 32.2% 25.1% 42.7%# of visits before

0 times 1.6% 11.7% 86.8%1 times 6.2% 35.8% 58.0%2 times 16.5% 34.6% 48.9%3 times+ 49.0% 26.2% 24.8%

Wynn, Lisboas, Venetian, Sands, Starworld, MGM:

Location, location, location…

• 72% visit Cotai, while 61% visit the Peninsula

• Integrated resort model a big draw, people like it all under one roof

Only Cotai39%

Only Peninsula28%

Both33%

Where will you gamble?

0%

5%

10%

15%

20%

25%

30%

35%

Why?

In Cotai, all under one roofPeninsula has more casinosWant to compare both and have time

Why not stay longer?What would make you leave one casino and go to another?

Want to change your

luck

Heard / read there is a

special promotion

Friends want to go there

Been at this casino already

for too long

Want to eat somewhere

elseOther

of Total 25.9% 19.3% 18.7% 26.3% 6.6% 3.2%

HK Visitors 23.9% 22.9% 21.1% 27.5% 3.7% 0.9%Age 18+ 23.7% 18.4% 26.3% 26.3% 2.6% 2.6%Age 30+ 15.0% 22.5% 22.5% 35.0% 5.0% 0.0%Age 40+ 20.0% 35.0% 15.0% 25.0% 5.0% 0.0%Age 50+ 60.0% 20.0% 10.0% 10.0% 0.0% 0.0%

GD Visitors 25.4% 18.3% 19.7% 21.1% 5.6% 9.9%Age 18+ 32.0% 28.0% 4.0% 16.0% 8.0% 12.0%Age 30+ 26.9% 15.4% 23.1% 23.1% 3.8% 7.7%Age 40+ 0.0% 7.7% 30.8% 38.5% 7.7% 15.4%Age 50+ 42.9% 14.3% 42.9% 0.0% 0.0% 0.0%

Rest of China 25.4% 18.3% 19.7% 21.1% 5.6% 9.9%Age 18+ 34.2% 18.4% 10.5% 26.3% 10.5% 0.0%Age 30+ 26.5% 16.3% 12.2% 26.5% 16.3% 2.0%Age 40+ 21.9% 15.6% 28.1% 31.3% 0.0% 3.1%Age 50+ 21.4% 21.4% 21.4% 28.6% 7.1% 0.0%

Dos & don’ts of promos

• Hongkongers dislike complicated processes

• Mainlanders dislike smaller payouts

• Payouts, rules, and game play are quite evenly relevant

Don’ts

What annoys you about a gaming promotion?

Poster / flyer does not explain the

promotion clearly enough

Process of qualifying too is

complicated

Payouts smaller than you expected

other

28.8% 42.2% 23.4% 5.6%

HK Visitors 30.7% 46.6% 19.0% 3.8%Age 18+ 30.0% 47.0% 18.9% 4.1%Age 30+ 37.1% 42.4% 17.9% 2.6%Age 40+ 17.5% 57.9% 19.3% 5.3%Age 50+ 17.5% 57.9% 19.3% 5.3%

GD Visitors 26.4% 39.8% 26.2% 7.7%Age 18+ 21.2% 42.9% 27.0% 9.0%Age 30+ 29.2% 38.4% 24.7% 7.8%Age 40+ 26.4% 37.6% 29.6% 6.4%Age 50+ 26.4% 37.6% 29.6% 6.4%

Rest of China 31.0% 39.9% 24.7% 4.4%Age 18+ 34.7% 37.9% 23.2% 4.2%Age 30+ 31.7% 41.3% 21.2% 5.8%Age 40+ 25.9% 43.1% 29.3% 1.7%Age 50+ 25.9% 43.1% 29.3% 1.7%

DosWhat is important to you in a gaming promotion?

Amount of money that can be won

clearly explained

Chances of winning clearly

explained

Creative idea – sounds like fun

others

Of Total 29.9% 29.9% 37.5% 2.7%




Hotel guests

• Price sensitivity is still very high

• But appeal of luxury hotel is still apparent, especially among mainlanders

• More things to do may yield longer guest stays

• Rooms are sold, not bought. Indirect distribution channels are crucial

• Prior experience also important but less so for outer PRC regions probably because many are on their first trip

All comes down to valueWhat made you decide to stay overnight?

Hotels are supposed to be

luxurious / fun

Got a good deal on

accommodations

On holiday – need more time to do

everythingOther

Of Total 29.3% 43.6% 20.7% 6.7%




Money, money, moneyWhat would make you stay an additional night beyond what you originally planned?

Cheaper room packages

More entertainment

options

Depends on how much I win

Other

Of Total 37.1% 42.6% 13.3% 7.0%




Rooms are sold, not bought

Why choose this hotel?

Agent’s recommendation

/ package

Been there before – happy

with it

Saw an advertisement for

it

Good location / cheap price

whether the hotel has a casino

Of Total 33.9% 21.0% 13.4% 25.9% 5.8%

HK Visitors 32.3% 25.9% 14.7% 23.1% 4.0%Age 18+ 27.3% 23.2% 20.2% 24.2% 5.1%Age 30+ 33.3% 31.2% 11.8% 20.4% 3.2%Age 40+ 44.1% 26.5% 2.9% 23.5% 2.9%Age 50+ 31.6% 21.1% 15.8% 26.3% 5.3%

GD Visitors 28.5% 26.8% 11.2% 25.1% 8.4%Age 18+ 29.8% 22.8% 15.8% 22.8% 8.8%Age 30+ 32.3% 24.6% 7.7% 29.2% 6.2%Age 40+ 19.0% 35.7% 14.3% 23.8% 7.1%Age 50+ 33.3% 22.2% 0.0% 22.2% 22.2%

Rest of China 40.4% 9.9% 13.8% 30.0% 5.9%Age 18+ 38.8% 10.2% 16.3% 26.5% 8.2%Age 30+ 43.5% 9.4% 11.8% 31.8% 3.5%Age 40+ 42.3% 7.7% 17.3% 28.8% 3.8%Age 50+ 26.7% 6.7% 6.7% 40.0% 20.0%

Know thy optionsDo you think you know about all there is to see / do in Macau?

Definitely Pretty much No idea

Of Total 11.1% 64.0% 24.9%

HK Visitors 10.5% 68.8% 20.7%Age 18+ 10.7% 72.8% 16.5%Age 30+ 9.5% 71.6% 18.9%Age 40+ 9.1% 60.6% 30.3%Age 50+ 21.1% 47.4% 31.6%

GD Visitors 16.6% 62.9% 20.6%Age 18+ 10.7% 64.3% 25.0%Age 30+ 19.0% 63.5% 17.5%Age 40+ 17.9% 69.2% 12.8%Age 50+ 27.3% 36.4% 36.4%

Rest of China 6.8% 58.6% 34.6%Age 18+ 6.3% 66.7% 27.1%Age 30+ 6.4% 64.1% 29.5%Age 40+ 2.0% 44.9% 53.1%Age 50+ 21.4% 50.0% 28.6%

Agents are your best friend

What could be done to better explain Macau’s attractions to you?

Travel agents need better brochures

Advertisements in mainland

mediaBetter websites

Of Total 47.2% 28.6% 24.3%

Age 18+ 42.8% 28.4% 28.8%Age 30+ 48.6% 28.6% 22.9%Age 40+ 50.0% 30.5% 19.5%Age 50+ 52.1% 27.1% 20.8%

The tech savvy

Which website did you use to help plan your trip?

General – Baidu / Sohu / Sina

Trip specialists ctrip.com and

elong.com

Macau specialists Youaomen.com and Macau.com

Other

Of Total 58.8% 3.6% 12.3% 25.3%

Age 18+ 56.3% 4.0% 17.9% 21.9%Age 30+ 55.9% 3.9% 9.5% 30.7%Age 40+ 72.5% 2.5% 6.3% 18.8%Age 50+ 60.9% 4.3% 17.4% 17.4%

Are amenities working?

• Guangdongers far less inclined to visit amenities

• Visitors would rather go to Macau Tower than see a show or go to a spa

• Visitors uneager to dine non-Portuguese cuisine

• Shopping a minor but relevant factor for Visitors

Not just gambling

What else will you do while you are here?

Sightseeing Dining Entertainment Shopping

Of Total 59.9% 59.6% 26.6% 40.4%




Landmarks, F&B

St Paul's / Senado Square

/ A-Ma templeOther Chinese

Portuguese / Macanese

Japanese Korean WesternNew restaurant

in Macau

Of Total 57.1% 4.5% 4.3% 47.1% 3.3% 0.8% 1.3% 6.0%

HK Visitors 53.7% 4.0% 2.7% 53.7% 2.7% 0.7% 2.7% 4.7%Age 18+ 51.0% 6.1% 4.1% 51.0% 2.0% 0.0% 4.1% 6.1%Age 30+ 53.4% 3.4% 1.7% 60.3% 3.4% 1.7% 0.0% 5.2%Age 40+ 68.0% 0.0% 0.0% 36.0% 4.0% 0.0% 8.0% 4.0%Age 50+ 40.0% 6.7% 6.7% 60.0% 0.0% 0.0% 0.0% 0.0%

GD Visitors 53.8% 6.6% 5.5% 44.0% 4.4% 0.0% 0.0% 5.5%Age 18+ 55.9% 2.9% 5.9% 44.1% 8.8% 0.0% 0.0% 8.8%Age 30+ 66.7% 10.0% 6.7% 46.7% 0.0% 0.0% 0.0% 6.7%Age 40+ 40.0% 6.7% 6.7% 46.7% 0.0% 0.0% 0.0% 0.0%Age 50+ 40.0% 10.0% 0.0% 40.0% 10.0% 0.0% 0.0% 0.0%

Rest of China 63.0% 3.9% 5.2% 43.5% 3.2% 1.3% 0.6% 7.8%Age 18+ 63.0% 2.2% 6.5% 45.7% 2.2% 2.2% 0.0% 10.9%Age 30+ 66.0% 5.7% 5.7% 39.6% 3.8% 1.9% 1.9% 7.5%Age 40+ 68.6% 2.9% 2.9% 48.6% 5.7% 0.0% 0.0% 5.7%Age 50+ 47.1% 5.9% 5.9% 41.2% 0.0% 0.0% 0.0% 5.9%

Sightseeing DiningWhat else will you do while you are here?

Activities

Massage SpaVisit Macau

TowerGolf Go-karts Shows Live bands at Karaoke

Of Total 3.5% 2.8% 14.0% 0.3% 2.8% 2.8% 0.0% 5.3%

HK Visitors 2.7% 3.4% 14.1% 0.0% 4.0% 1.3% 0.0% 8.1%Age 18+ 2.0% 4.1% 10.2% 0.0% 6.1% 0.0% 0.0% 4.1%Age 30+ 0.0% 0.0% 17.2% 0.0% 1.7% 1.7% 0.0% 5.2%Age 40+ 12.0% 8.0% 24.0% 0.0% 4.0% 0.0% 0.0% 20.0%Age 50+ 0.0% 6.7% 0.0% 0.0% 6.7% 6.7% 0.0% 13.3%

GD Visitors 2.2% 0.0% 12.1% 0.0% 0.0% 4.4% 0.0% 4.4%Age 18+ 0.0% 0.0% 23.5% 0.0% 0.0% 5.9% 0.0% 8.8%Age 30+ 6.7% 0.0% 6.7% 0.0% 0.0% 3.3% 0.0% 0.0%Age 40+ 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 6.7%Age 50+ 0.0% 0.0% 10.0% 0.0% 0.0% 10.0% 0.0% 0.0%

Rest of China 5.2% 3.9% 14.9% 0.6% 3.2% 1.9% 0.0% 3.2%Age 18+ 2.2% 4.3% 13.0% 0.0% 2.2% 2.2% 0.0% 2.2%Age 30+ 3.8% 3.8% 24.5% 0.0% 7.5% 3.8% 0.0% 3.8%Age 40+ 8.6% 5.7% 8.6% 0.0% 0.0% 0.0% 0.0% 2.9%Age 50+ 11.8% 0.0% 5.9% 5.9% 0.0% 0.0% 0.0% 5.9%

EntertainmentWhat else will you do while you are here?

What has changed?

• COD is helping to build Cotai further– MGF revenue is half of Venetian's, but catching up

to peninsula casinos

• Premium mass is becoming all-important

• Zaia was a flop, but Dragone looks promising

• Plaza is kicking in – US$19m ebitda in 1Q

• Galaxy Macau will be key driver in 2011

Thank you

Intelligence Macau

We look forward to hearing from you

DisclaimerThe contents of this presentation is for the sole purpose to provide information only. By no means should it be construed as any form of advice, investment or otherwise. Information provided in this presentation is believed to be reliable at the time of compilation. However, we cannot guarantee that information will be accurate, complete and current at all times. Macau Intelligence will from time to time, on a reasonable efforts basis, revise the information, products and services described on this presentation, and reserves the right to make such changes without notice.

Macau Intelligence will not be liable for damages to you or others due to usage of the information contained in this presentation. The information should not be used, or relied upon by you, as a substitute for your independent research or consultation with other sources of expertise.

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