Tough road ahead as Macau gambles on mass tourism

AFP - With casino revenues in Macau in freefall due to Beijing’s anticorruption crackdown and a slowing Chinese economy, the gambling hub is hoping to reinvent itself as a familyfriendly mass market destination.

But the enclave’s plan to replace the high-rolling elite with tourists drawn by new entertainment-focused megaresorts will not be plain sailing.

Macau’s creaking infrastructure is already struggling to cope with visitor numbers and analysts and residents question how the city can accommodate the influx necessary to make up for the loss of VIPgamblers.

“Casino operators cannot expect the return of the good old days,” says Macau expert Sonny Lo of the Hong Kong Institute of Education.

Lo says the success of Macau’s reinvention depends on consumers’ appetite for both mass market gaming and non-gambling entertainment.

“It remains to be seen whether tourists are developing this taste.”

Even then, the boom heights of the past decadewillbehardtoreach,Losays.

“Consumers on the mass market cannot compensate for the huge amount of money spent inVIProoms.”

Macau soared past Las Vegas as the world’s gambling capital after opening up to international operators in 2001 and raked in more than seven times its US counterpart last year.

However, it is now being forced to follow Vegas’ lead and transform from a hardcore gambling hub into a destination with much broader appeal.

Casino revenues plunged 39 percent in April, their 11th consecutive drop in the wake of Chinese President Xi Jinping’s anti-corruption crusade targeting lavish spending by officials and money laundering through Macau.

Beijing has made it clear it wants the former Portuguese colony to move away from gambling, so casino-hotels are opening a slew of mass market complexes.

The resorts offer everything from fine dining and malls to theme park rides and shows, alongside gaming.

Melco Crown’s Studio City, due to open later this year, boasts Asia’s highest ferris wheel while the recently opened Galaxy Phase 2 has a sprawling rooftop water park complete with river rapids.

Sands’ Paris-themed resort, with a replica Eiffel Tower, is due to open next year, as will the Wynn Palace and a new casino-hotel from MGM.

The ‘new normal’

“You see Macau evolving,” says Simon Cooper, president of Asia Pacific for Marriott International -- which has two hotels in the new Galaxy complex.

“We fully expect the consumer of today is going to be much more of a typical leisure consumer, not totally focused on gambling.”

Enticing those visitors requires big ideas, Cooper says.

“You don’t want somebody just putting up 4,000 hotel rooms and a couple of restaurants. You want developers who are building magnets that people read about and say: ‘Oh, I’ve got to go there’,” he toldAFP.

Deputy chairman of Galaxy Entertainment Group Francis Lui said the new complex only has two VIP rooms.

“The trend is that we hope to have more business from the middle class -we feel that this is the new normal,” he said at the casino resort’s opening.

City overloaded

While analysts agree the push to mass market is a must, there are significant hurdles before it can really take off. Macau is home to around 636,000 residents but visitor numbers were 31.5 million in 2014 -- two thirds of them from mainland China.

“This is a small town and sooner or later you reach a market capacity,” says Macau business media publisher PauloAzevedo.

“Public expenditure for infrastructure has been lagging behind.

“It is possible for the mass market to compensate (for the VIP market). However, if the town’s not ready to receive more visitors... then you will not grow the mass market.”

The government has proposed capping the number of visitors from China at the current level of 21 million -- a setback for the new resorts.

Residents say life has already been marred by the flood of visitors and worry about any i ncrease in numbers.

“A lot of the daily items that residents want to buy are no longer available,” with local shops replaced by tourist-friendly stores, 48-year- old restaurant owner Vong Kam-koc told AFP. “If you want to ride the bus, you can’t, you can’t ride a taxi -- this is a burden on Macau, the city has not done enough in preparing for this.”

Positive step

There is also the problem of mainland tourists ditching Macau, which also has a World Heritage listed historic centre, for destinations further a field. “Mainlanders are fleeing Hong Kong and Macau and looking for new experiences,” a report by brokerage CLSA said in April.

“Anti-corruption measures, which are here to stay, are exacerbating that process,” it said.

The high price of food and accommodation are an additional deterrent. “The cost of items here is quite high even when compared to Hong Kong,” says hotel worker Rayson Chow, visiting from the southern Chinese city of Shenzhen.

Some however, see Macau’s reinvention as a positive new beginning. “Because of the casinos, it is not proper for children to come here to play,” said Celia Liu, a 22-year old student, also from Shenzhen. “If you create other things that are family friendly, where you can also bring children or the elderly along to relax, then it would be very good.” The reining in of junkets and big spenders is also seen by some as a plus.

“Where did the VIPs get their money? Are t he VIPs corrupt officials?” said one Macau civil servant in his 50s, who gave his name as Wong.

“I wouldn’t want Macau making money from these people.”