Melco: broad digital transformation in integrated resorts

Melco’s Avery Palos and Chang Lim on the ways digital transformation is becoming the differentiator in the integrated resorts industry

|Feb 10|magazine15 min read

Melco Resorts & Entertainment operates a suite of international integrated resorts, as Avery Palos, Senior Vice President and Global Chief Information Officer, explains: “The concept behind an integrated resort is a combination of gaming, hospitality, food and beverage, retail shopping, entertainment and transportation. We've got operations in Macau, the Philippines and Cyprus with physical operating licenses to operate and manage casino facilities, and then we've got offices in Japan and are headquartered in Hong Kong.”

As a company of only around 20 years of age, it retains a dynamism with a positive drive which Palos believes makes business stakeholders more receptive to change. “It's a fairly young company and so is the management which has helped us to deliver the goals of our digital transformation initiatives. A lot of the challenges tend to be not about the technology, but more about changing people's perceptions on how we work.”

That’s beneficial, as digital transformation in the integrated resort industry can be tricky to begin with owing to the wide-range of services offered. “We need to manage casinos, hotels, restaurants, malls, transportation and also support the back office of the entire company in Macau, Manila and Cyprus,” explains Chang Lim, Vice President, Digital Transformation, “We’re lucky in that we get to see a lot of interesting initiatives and develop a very cross-functional view of the company. But when it comes time for us to actually bring everything together, that obviously requires a lot of coordination effort.”

Because of the ambition of the digital transformation initiative, an attendant focus on culture is a must. “To some degree there's always a bit of a tendency to stay with what you know, and stay in your comfort zone,” says Palos. “Asking people to do things that are new or different is always a bit of a challenge.” Overcoming that has required taking a grassroots approach. “We try to get people excited about new technology, because it might make their life easier, either from the products and services that they're giving to our guests or the consumption of it. Our employees, for instance, have an employee mobile app which lets them consume a lot of the services as our guests do.” 

Lim concurs, emphasising the support of senior management for the digital initiatives they have put in place. Those digital programs span a multitude of systems and business areas. “I think we're operating over 80% on the cloud,” says Palos. “And in some places such as Cyprus, we’re at 100%.” Lim adds that: “From a cloud perspective, we’re very agnostic, because we don't want to depend on one single cloud provider. That's why we distribute it across the different major players in the industry, such as AWS.” 

Emerging technologies play a significant role at the organisation. “We spend a lot of our time looking at how we can apply those kinds of technologies into our operations to help better serve our customers and guests,” says Palos. “We're probably one of the first casino operators that actually adopted blockchains in part of our production environment.” One example is a blockchain used in the casino’s cage, to track all transactions for gaming activity. Melco also built a prototype called MelGuard for use in Japan. It uses blockchain as a mechanism for keeping track of player activities, such as how long they’ve been inside in order to promote responsible gaming. “We’re actually considering building a consortium using blockchain in Japan to share that information with the regulator - because there's a social mandate for it in the country,” says Palos.

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Quotables

We’re lucky in that we get to see a lot of interesting stuff and develop a very cross functional view of the company

Chang Lim | Vice President, Digital Transformation, Melco

AI and machine learning are another key focus, such as video analytics to analyse casino chips as they sit on a table and determine their colour and how many there are in order to understand how much is in the game – improving the accuracy of human observers who are unable to keep up with the amount of activity. That helps to prevent fraud and reduce the amount of dispute. “We also use facial recognition,” says Palos, “to help us identify people who've been barred from the casino. We’re also starting to build out algorithms for dynamic offers and incentives. Say we just noticed that you won a game. Let's send you a bottle of champagne and make you an exciting Melco offer such as a free hotel room so that you'll come back next time.”

Casino tables, meanwhile, have always been higher-tech than you might imagine, requiring multiple computers stationed underneath the table or in separate computer rooms to operate. “But of course, maintaining these computers can be time-consuming and resource-intensive,” says Palos. “They get beaten up as they aged, and expose our operation to higher failure rates and potential security issues. We boiled down the essence of that, and now we converted these computers to Raspberry Pis. ” Those IoT devices have proved very versatile, as Palos explains. “That one Pi, which is about US$25 per device, takes the place of all those computers and runs the entire table, including the screens and the signage. We also leverage these Pis to help control the AC, the lights, the curtains -you name it - in some of our guest rooms” 

Partners have played a big role in making such a wide-ranging digital transformation possible, with Melco possessing a clear rationale when it comes to selecting those it works with. “The one thing that we try to do is try to find tech partners that have unique products and services” says Lim. “Even if it's tangential to our industry, it may not be anything that's used in our industry at all right now, we like to engage with them and see if there's an opportunity to integrate them into our digital transformation ecosystem.”

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The ongoing COVID-19 pandemic has presented challenges, as with essentially all businesses around the globe, but Melco’s technology has risen to the challenge. One initiative which has been accelerated is the practice of having digital, mobile app-based digital tokens rather than physical ones, and explore reducing certain unnecessary human-to-human interactions in some of the business operations, both removing a potential mechanism for the transmission of the virus. “We have also deployed robots,” says Lim. “Helping with cleaning, checking temperatures and delivering drinks to help ensure a safer environment for our guests.”

Palos is clear that such initiatives mean the future is bright for the company, with a current focus on acquiring licenses for new jurisdictions in Japan. “As we continue to apply digital to that journey, it makes us a smarter, faster, sharper operator, which again helps to parlay things like improving our customer services, and growing revenue streams. Our Chairman and CEO Lawrence Ho has said that he believes that digital is the way out of this problem. If COVID can't be resolved tomorrow, which nobody thinks it will, the only way forward is digital - which is why building a digital presence is so important.”

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