With over 30 years of experience leading all facets of multiple global integrated resorts across the U.S. and internationally, Mohegan Gaming & Entertainment’s (MGE) COO, Michael Silberling, is in a unique position to analyse just how important Integrated Resorts (IR) are to the industry.
Speaking ahead of his appearance at the annual International Casino Conference, which is part of ICE VOX, Silberling explores the power of entertainment, identifies Europe’s IR hotspots and explains why diversity is essential to ensure continued consumer appeal in a digital gaming age.
In your opinion, where can we find the best examples of Integrated Resorts in action?
As you know, Integrated Resorts continue to evolve. We commonly see both introductions and deletions of various IR amenities based on changing consumer preferences. The best examples of Integrated Resorts can undoubtedly be found in markets such as Las Vegas, Macau and Singapore. This is in no way intended to discount IRs in other markets such as the Philippines and throughout the US. In some resort destinations, non-gaming hotels are adding more and more amenities/facilities, but still pale in comparison to the comprehensive amenities/facilities such as arenas, shopping malls, theatres, nightclubs, etc. found in the gaming IRs. You'll note that each IR positions itself to cater to certain segments of the market, as well as to differentiate itself from its competitive landscape. Therefore, facilities and amenities tend to vary based on this positioning strategy. IRs are called ‘Integrated Resorts’ because of the wide variety of offerings found in the same location. Some IRs, based on their unique positioning, will have larger, more extensive resort amenities, while others will focus their offerings around convention business and yet still others will place greater focus on attractions and entertainment.
Are Integrated Resorts popular with regulators on the basis that they dilute the focus on gambling?
I can't speak to the mindset of industry ‘regulators’, however, I can say that many local governments appreciate the historical economic impacts that the introduction of a new IR development brings to the community. This includes substantial increases in overall tourism visitation, which in turn generates numerous financial impacts across multiple economic sectors. Furthermore, the IRs yield significant job creation (direct, indirect and induced) and infrastructure improvements that have a ripple effect on the local economy, especially in regards to tax revenues for government initiatives. These impacts are multiplied to the extent that IR visitation grows. Though there is a combination of elements that play into the success and attractiveness of an IR, gaming remains the primary component for the financing of these large-scale resorts. In many markets, including Las Vegas, the most significant contribution of revenue initially came from the casino. However, as the resorts and the consumers have evolved, we now see a more balanced contribution of revenue between non-gaming and gaming. In fact, some of today's largest resorts on the Las Vegas Strip have a larger contribution of non-gaming revenue than they do casino revenue.
Can you crystallise the Integrated Resorts business model?
As mentioned earlier, each IR must find its own positioning for its market. Regardless of its positioning, the IR model endeavours to merge traditional hospitality and resort facilities with numerous experiences and entertainment components, ultimately aiming to provide a ‘one-stop-shop’ for consumers.
In today's world, even food and beverage and retail are executed at an experiential and entertainment level. We, as consumers, regardless of the economic bracket, all allocate (whether we know it or not) a portion of our income for entertainment. This may be as simple as going to the movies, playing video games, downloading/listening to music, attending a concert, show or museum, or more broadly taking a well-deserved vacation. The IR model intends to house all of these entertainment options under one roof, offering many alternatives at many different price points for its consumers, both tourists and locals alike. When executed properly, patrons visiting an IR will always find something to indulge in. The primary goal is to provide enough diversity within the resort facility to capture the most valuable asset of consumers: their time. In turn, the IR is able to translate that time into both share of wallet and share of market.
Do you see Integrated Resorts as the future of the "gambling entertainment" proposition and, if so, what do the next five years look like to you?
Yes. We believe that the future growth of our industry is centred around compelling Integrated Resort propositions, whereby the IR itself becomes a must-see attraction for visitors. The history of Las Vegas serves as a historical example of how the industry has evolved, starting first with simple gambling halls with limited or no amenities and then expanding to larger, more comprehensive entertainment and hotel facilities that we see today. Today, the IRs around the world represent some of the largest, most successful resorts in the world.
Continuing along this path, the future of gambling entertainment (Integrated Resorts) will certainly aim to meet and exceed the evolving interests of its customers. Over the next five years, I believe many markets around the world will see the benefits of IR developments and will explore the possibility of their introduction, where it makes sense. Additionally, the worldwide proliferation of gaming, both physical and digital, has spurred a convenience factor. Therefore, for casino facilities to survive and excel in the future, they will need to continue to incorporate non-gaming facilities as a point of differentiation and consumer attractiveness.
Where do you see Integrated Resorts working most effectively in Europe?
Europe is a complicated and diverse geographic area, blending many different cultures, yet coming together as a unified region. First and foremost, IRs tend to be the most successful when there's a combination of an established tourism market, infrastructure (airport roads, ports, etc.) and proximity to metropolitan areas. Several areas of Europe have the benefit of strong regulatory environments, providing additional comfort and safety for consumers. With these elements in place as an underlying base for development, Europe offers many promising locations, including cities such as Athens and Barcelona.
Again, as communities come to learn and understand what integrated resorts are, many may consider their introduction to help stimulate areas that may be stagnating or in decline. To be clear, IRs are not the ultimate economic solution for all areas; however, in many cases, they become the initial stimulus that increases overall growth throughout various sectors.
How important is the ICC in terms of a) stimulating debate and b) setting the future agenda?
The International Casino Conference always provides a great platform for stimulating discussions and debate. In terms of setting the future agenda, the ICC brings to the forefront open introductions and dialogue surrounding: industry growth; emerging markets; evolution of the industry; new technologies; consumer trends and behaviour, and, of course, industry disruptions. It is my hope that the ICC will continue to focus on highlighting the elements noted above.
As mentioned earlier, a panel of brand experts will provide valuable knowledge for all the participants of ICE VOX.