Tough road lies ahead as Ma­cau gam­bles on mass tourism over­haul

The China Post - - COMMENTARY - BY LAURA MANNERING AND AARON TAM

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 fam­ily-friendly mass mar­ket des­ti­na­tion.

But the en­clave’s plan to re­place the high-rolling elite with tourists drawn by new en­ter­tain­ment­fo­cused mega-re­sorts 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 VIP gam­blers.

“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 decade will be hard to reach, Lo says.

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

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 U.S. 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 told AFP.

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 Paulo Azevedo.

“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 in­crease 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 cen­ter, for des­ti­na­tions fur­ther afield.

“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 the 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.”

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