How casino companies can progress in the face of disruption

This post is authored by Jihwan Ko who served as an MBA intern for the AWS Travel and Hospitality team with a focus on the casino segment.

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As with nearly every other industry around the world, the global pandemic has adversely affected all segments of the travel and hospitality business. In the casino-resort segment, this means having to quickly adapt and implement policies and services that meet guests’ and employees’ evolving needs, and ensure a healthy and safe environment.

Thinking about the shifting casino-resort business landscape made me nostalgic for the day I went to a small casino in Da Nang, Vietnam, about two years ago. Located 30 miles from where I was staying, in a relatively rural area, this casino is a hot spot for fun and relaxation. Its popularity was demonstrated when our group ended up waiting almost an hour to enter, and even once we got inside, it was so crowded that we still had to wait a long time to play craps.

Interestingly, as I began to roll the dice, I came to realize that the guests at the casino had a wide variety of backgrounds. The ones who played craps with me were from China, Vietnam, Singapore, Japan, the UK, and Australia. This made me consider how the casino had brought together people from all over the world as a space where I could have unique experiences with craps players from different cultures. Yet today, such pleasant memories of socializing and gambling in a crowded, festive environment seem much longer ago than just two years.

Signs of a return to normal business are beginning to emerge when some casino resorts began to resume operations. Yet they did this cautiously with health concerns their primary focus. These new aspects of “business as usual” led to the realization that the current environment requires the compelling, differentiating initiatives to help recover projected revenues. With this in mind, casino resorts are reimagining their approach to resuming business every step of the way and took innovative measures such as contact-free customer engagements. This includes them considering avenues to new rapid revenue recovery opportunities that were not previously considered. In all, I hope casinos everywhere can leverage technology to whether the current storm and continue to serve their customers.

A look at the Asian casino market

I count myself as a millennial, and we who are a part of that cohort, in addition to the subsequent Generation Z populace that came after us, are already earning and spending substantial amounts of money. This is one of the many ways millennials and Gen Z members have distinguished themselves from their older siblings. In short, these generations are more open minded about discovering different encounters and are willing to pay for enhanced experiences. With the growth of the middle class in Asia, these generations have noticeably contributed to the growth of the Asian casino-resort market over the past few years.

Concurrently, and fortuitously for casino-resort operators, the willing spending habits of millennials and Gen Z members have coincided with the liberalization of gaming licensing and regulation policies in several Asian countries. In fact, over the last five years, potential economic impact presented by casino-resorts has precipitated, a pending bidding process for the first casino in Japan—which is expected to start in 2021, despite the COVID-19 delay.

It is projected that the Japanese casino market is expected to be similar in size to that of Macau, in China, which is the world’s second-largest gaming market. In addition, South Korea, Vietnam, and Singapore have also issued casino permits in specific areas, such as Yeongjongdo, Hoi An, and Marina Bay, respectively.

While this receptive government approach to gaming interests is expected to increase in the coming years, it is important to note that their willingness to expand these opportunities appears to be linked to national fiscal shortcomings. In the countries mentioned, a pattern has emerged where it appears that relaxed gaming regulations occur as government budget deficits increase. Research by the financial firm Morgan Stanley supports this. Its findings show that with national deficits expected to increase at least 15% to 25% after COVID-19, these governmental institutions will likely become more inclined to reduce the level of regulation in the coming years to make up for lost tax revenue.

An underlying factor—one that could not have been addressed under prior government gaming licensing policies in these countries—contributing to the growth of the Asian casino market is the cultural acceptance of various forms of gambling and games of chance. If you look at the history of many Asian countries, people have placed wagers as a form of recreation and social engagement since the dawn of time. For example, in South Korea, where I was raised, from the sixth century, Koreans used cards made of paper and silk that they called “fighting arrows.” These “games” had as much in common with tarot card readings as they did with how we now think of poker. In fact, such casino-type games have long been recognized as common, popular social-engagement drivers in many Asian countries for centuries.

Learning from Melco Resorts & Entertainment

Committing the required amount of money, time, and resources to building and successfully operating a casino-resort that makes guests want to stay there presents numerous challenges. According to Chang Lim, VP of Melco Resorts & Entertainment, a luxury casino-resort operator and AWS Travel and Hospitality customer, it used to take Melco about nine months to get its on-premises data centers up and running when it opened a new property. Melco usually then also had to spend additional time adapting its approach to fit to with the culture of its casino-resorts’ location. This ensured the regional teams would have a clear understanding of the services and amenities they needed to offer to guests and optimize their experience. This lead time is not only a considerable cost for casino-resort operators but also a factor that undermines their operational efficiency. If handled incorrectly, this lead time can adversely affect the casino-resort’s operational efficiency and be more costly than anticipated. For casino operators seeking new ways to enhance guest experiences and tap into new revenue streams, who need to recover as rapidly as possible, it’s necessary to reduce these lead times and capture opportunities quickly. In the current climate, the need for speed has never been greater.

AWS has the most cloud services, capabilities, and experience available, all of which enable customers to accelerate innovation through automation. The breadth and depth of these AWS services enable casino operators to quickly spin up instances and gain access to needed resources on demand. Whether this means deploying several new servers in minutes, not weeks or months, or quickly scaling up new mobile applications to optimize guest experiences. This allows casino operators to quickly develop and roll out new solutions, while empowering their teams to experiment and innovate more frequently. As a result, these properties are able to increase the number of services and amenities they offer guests, including reservations, check ins, dining arrangements, spa time — all —contact-free using a mobile device.

The need for accelerated innovation and flexible solutions drove Melco Resort & Entertainment’s decision to become an AWS customer. Melco currently operates luxury casino-resorts in Macau, the Philippines, and Cyprus, with plans to open additional locations. ​As the company expanded its business, Melco has reduced its setup time from nine months to roughly four weeks using AWS solutions to more efficiently provide the services and amenities necessary to optimize its guest experiences. Melco desired to deliver products and services to guests faster. Using many AWS solutions, including Amazon DynamoDB, Amazon ElastiCache, Amazon Elastic Kubernetes Service (Amazon EKS), Amazon GuardDuty, and Amazon Relational Database Service (Amazon RDS) to support its global system and better understand and fulfill its guests’ needs, Melco has transformed into a digital technology company. Reducing lead times has enabled Melco to focus more resources on the core services that enhance and optimize the guest experience and create whatever is needed for guests.

For a deeper dive, I invite you to watch our customer video case study: Melco Resorts and Entertainment’s Digital Transformation.  It provides insights on how AWS has helped Melco gain agility, increase innovation, and reduce costs by and reallocating resources to higher-value, revenue-generating projects. After all, its business is about managing luxury casino-resorts, not managing IT infrastructure.

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Learn more about how AWS is transforming the travel and hospitality industry.

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Jihwan Ko worked as an MBA Business Developer Intern for Amazon Web Services (AWS) and contributed to incubating the AWS Casino industry. He was charged with supporting customers as they accelerate cloud adoption. Before joining AWS, Jihwan had seven years of experience as a corporate strategy manager and industry analyst in technology companies, including Samsung Electronics. At TMON, Korea’s leading ecommerce company, he created a cross-selling tourism package platform. He also raised $240 million in investment funds from private equity and strategic investors. He was born in raised in Seoul, South Korea, and has a Bachelor’s degree in Business Administration from Hanyang University in South Korea, and is an MBA Candidate at the University of Virginia Darden School of Business.