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  Today Online 5 Feb 07
What IRs can learn from failed revue
Emphasis should be put on developing non-gaming components of the IRs
Letter from ng ya ken

I refer to the news, "One last dance" (Feb 3-4) on the closure of the Crazy Horse revue in Singapore. Venturing into a business nobody has attempted before always carries a higher risk. The investors of the Crazy Horse apparently understood this.

In the business world, there are many other temptations besides being the first, such as to be the biggest, the tallest, the most glamourous, and so on. We saw that in the two bidding races for the integrated resorts at Marina Bay and Sentosa. Pursuing these extra titles would increase the risk factors of a business venture.

Hence, the price tags and the benefits of these titles must be analysed carefully.

With the relatively short time--compared to Las Vegas or Macau--bidders here had to put up the plans and garner partners for their proposals, the two IR winners might not have vigorously tested the concept of the various business and non-business components in the market.

The supercasinos of Las Vegas derive their main income (about 60 per cent) from non-gaming businesses. In contrast, our IRs would have to depend on gaming as the main source of income and have to cross-subsidise the less profitable or non-viable components of the projects.

The danger is that if not properly managed and developed, over years, the less profitable components may end up like the Crazy Horse.

In strategic management terms, these less profitable business units are called "problem children" or "dogs". But dog or not, they have an important role to play in the IRs.

Remember, these non-gaming components, be it a museum or an aquarium, are also part and parcel of our tourism strategy.

More careful planning may result in reducing their reliance on subsidies from the casinos or turn them into small "cash cows" on their own.

What are the established understandings on the sum of the gaming revenue to be used for the operation, maintenance and future development of these non-gaming businesses and features?
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