A diagnosis of inherent problems in enhancing service quality through internal marketing and organizational identification in Macau and Singapore Casinos

AbstractWith spectacular growth in demand since opening the market to foreign competition, executives within the Macau casino industry have focused their attention on enhancing capacity and opening new casino properties. Meanwhile, the Singapore casino market, barely two years old, has already produced revenues comparable to the Las Vegas Strip. Despite stellar past successes, the long-term scenario for the casino industry in both Macau and Singapore could spell trouble. Specifically, service quality stands to suffer because operators have not devoted adequate thought to their service culture and internal marketing strategy. With overall capacity in Asia slated to increase significantly in the next couple of years, the labor shortage for casino companies in Macau and Singapore will get more acute. Current impressive revenues notwithstanding, increased capacity will also put pressure on marketing to attract and retain valued customers. In light of these developments, we review five key challenges to internal marketing practices for casinos in Macau and Singapore: culture, climate, recruitment, compensation, and training.IntroductionIn today's world of global competition and saturated demand, few industries have the luxury of operating in an enviromnent characterized by huge pent-up demand and limited competition. Yet, this is precisely the scenario encountered in the newly opened or recently liberalized casino markets of Macau and Singapore. A munificent business climate of huge umnet demand offers little incentive for top management to engage in employee- or customer-oriented strategic initiatives that would ensure continued success of their casino enterprises. We contend that attention to issues such as corporate culture and internal marketing during times of prosperity offers the best insurance against labor shortages and unexpected abrupt drops in demand. To better comprehend management orientation in the casino markets of Macau and Singapore, we present a framework to explain the lack of focus on creating a customer-centric culture and on fostering organizational identification by employees.The casino industry in Macau and Singapore has exhibited robust growth over the last five years. Macau is largely responsible for the solid financial results of U.S. gaming companies such as Wynn and Las Vegas Sands. Recent reports suggest that close to 85% of revenues of Las Vegas Sands originate from Macau and Singapore. That Wynn, Las Vegas Sands, and MGM have all sought to list their securities on the Hong Kong market should therefore not come as a surprise to anyone.Year on year, the casino gambling revenue in Macau jumped 5 7.8% in 2010 and another 42% in 2011 to reach $33.5 billion. Impending future competition and labor shortage, however, may make significant dents in the sector's profitability. For example. Galaxy Macau has recently built a 2,200-room casino integrated resort with around 600 tables and 1,500 slot machines. Parcels 5 and 6 for Venetian have also resumed construction. Wynn Macau has already received approval to build a casino on the Cotai strip. According to an article in the August 26, 2010, issue of Macau Post Daily, the Galaxy Macau and a new Sands China property - scheduled open in 2013 - are set to employ over 22,000 workers in total.These new properties will create substantial additional capacity in gaming products. Tens of thousands of new employees will be needed to ran the new facilities. This increased labor demand is set against a backdrop of a steadily decreasing unemployment rate in Macau. The Statistics and Census Service of Macau has said that the unemployment rate for May-July 2012 receded to 2.0%; the underemployment rate was 0.9%. In recognition of the labor shortage threat, many currently operating properties will have to intensity their efforts to retain their workforce. Furthermore, importation of labor for frontline jobs is not easy. The SAR Government in Macau has been very strict about allowing the importation of foreign labor, and has imposed punitive sanctions on companies that violate laws in relation to employment of local versus foreign workers. …