Less gambling more entertainement, is 2015 a turning point for Macau?

In 2013 Macau's gambling revenue reached $45.2 Billion. It was taking Macau's gamblers just one day to wager the amount bet in an entire week on the Las Vegas Strip. Business was booming. Analysts were predicting $70 billion revenue for 2017. During this period, designs for new casinos were unveiled and developments began, with 8 new casino resorts due to be constructed in the so called Cotai 2.0 area.

 Two years later things have completely changed. Macau casinos have experienced 10 straight months of declining gaming revenue. Projects which at first seemed an easy golden ticket to huge profits once they opened, now risk become an investors nightmare. Demand is not currently outweighing supply, and so 8 new casinos in the market could be no longer suggestive of a good plan.

Macau under Beijing pressure

  The main reason of this downturn can be found in mainland China. It has been well documented that over the past year or two, Chinese government leaders have been keeping a very close eye on Macau. They have imposed control over the movement of money and general junket operations. The anti corruption initiative which is targeting “corrupt” officials has also scared Chinese VIP customers who no longer feel safe gambling in Macau. The city is too close to the watching eyes of Beijing for them to feel comfortable.

 Table Cap and Labour Shortage

 The fall in gaming revenue is not the only challenge threatening Cotai 2.0. The cap on new gaming tables that has been implemented has also led to problems arising in Macau. There is an allocation based on a maximum 3% annual growth rate, meaning that a mere 171 new tables will be allowed this year based on the 5,711 in existence. With three new casinos due to open in 2015, Galaxy 2, Broadway, and Melco Crown's Studio City, this isn't even close to the 900 tables that those new developments hoped to bring to Macau. Next year, 4 more casinos will open, with hopes for 1,500 more tables. This is almost ten times higher than the projected allowance.

  Other laws in Macau create a situation where foreign workers cannot be employed at gaming tables, which will undoubtedly lead to a staff shortage when these new casinos open for business. 50,000 staff will be required in the next two years, but reports suggest that only 6,700 people are unemployed in the area.

Construction MAcau

 Casinos under construction on Cotai Strip 

Non-Gaming revenue

  Both Chinese Macanese and Chinese authorities made it clear that their ultimate goal is to help Macau rely on non-gaming revenue alongside gaming income, and so turn it into a tourist attraction rather than a simple gamblers paradise. Chief executive of Macau Fernando Chui Sai On has mentioned that growing the non-gaming offerings in Macau will be an important issue when discussing license renewal.

  Goal is to follow the model of Las Vegas who have moved from a gaming centric business model in the 90's to a place where 64% of income of the Strip is non-gaming related in 2013. In Macau, the best performer in terms of non-gaming revenue is the Sands China, running at 10%. SJM non-gaming revenue is under 1%. With the initial growth in Macau several years ago being fuelled by gambling, there was no need to invest in non-gaming offerings. But with changing times, has come a changing Macau, with 2015 as a turning point.

 Cotai 2.0: More entertainment less gaming

  In this context, Tourism and leisure will be the key focus for new Cotai developments. New casinos will include private gardens, luxury mansions hidden within the hotel itself, and many entertainment outlets for a family friendly environment. MGM China which is due to open in early 2016 has allocated 85% of it's floor space to non gaming offerings. Wynn Palace is another which will offer many things besides gambling. Meeting spaces, a spa, and performance lake among others.

 Galaxy II

 Phase two of expansion will see the size of this property double, with a great deal of retail space, and 45 new food and beverage outlets. They will grow to accommodate 3,600 rooms in 5 hotel buildings. There will effectively be an en suite Ritz Carlton within it's borders, with fine dining michelin star establishments on site. The skytop wave pool and adventure rapids will remains one of the biggest attractions for customers, boasting the world's longest skytop river adventure at 575 metres long.

 Broadway Macau

 The 3,000 seat auditorium with a vast range of productions ensures that Broadway Macau maintains it's appeal to non VIP players and people looking for a fun day out. Having it's very own street market with dozens of food stalls also adds to the list of things to do which aren't gambling based. Street performers will also be everywhere, and Broadway will be linked to Galaxy II by air conditioned sky bridge.

 Studio City

 Taking the best that Hollywood has to offer and bringing it to Macau isn't easy, but Studio City aims to do precisely that, magic shows, film viewings, in a huge cinematically themed complex are everything that non gaming customers looks for. Night clubs and theme parks are an additional attraction, as is Asia's highest ferris wheel, Golden Eye. Built between the two main towers of the building, This ferris wheel will be one of the must see attractions of Macau.

 The Parisian

 With a scale replica of the Eiffel Tower, the Parisian has much to offer in terms of landmarks. It's opening has been delayed, but there are rumours that opening dates for major constructions are being staggered to allow each of them to get a lot of attention for their grand openings. With 150 shops and 15 restaurants, The Parisian will be larger than most of the ongoing developments, and will add another 3,000 hotel rooms too.

The PArisian Macau

The Parisian will feature a 165 meter replica of the Eiffel  Tower

 Wynn Palace

 With an investment of HK$31 billion, hopes are high for Wynn palace, which will add an extra 1,700 hotel rooms to the area. Restaurants with  a Bellagio style performance lake will be an attraction, and floral theme throughout will also help Wynn Palace stand out. With an aerial transport system and gondolas helping to ferry people in and out of the resort, it certainly promises to be something special.

 Louis XIII

 Due to open by mid 2016, this establishment hopes to draw in a large crowd of wealthy VIP customers. It does have other alluring features though, such as jewellery stores located within the premises, and 30 Rolls Royce Phantoms which will ferry high rollers between their destinations. There is no doubt that of all the current developments, Louis XIII is the biggest concern as it targets the highest stakes players, in a time where they are staying away from Macau. Time will tell if this development can become a success.

 MGM Cotai

 The MGM Cotai stands out architecturally as much as anything else, with a very unique building design. 1,600 new hotel rooms will be incorporated, along with a five storey luxury mansion within the premises. Skylofts with special top floor residences will ensure that MGM Coati has plenty to offer customers when opening day arrives.

 Lisboa Palace

This development will be larger than most of those which are underway, and faces a difficult challenge to bring itself into line with plans to offer diversity from gambling and become a tourist attraction in it's own right. It will offer retail outlets, restaurants, hotel rooms to start off, and a theatre, along with a grand wedding pavilion, in order to offer something different. One thing is for sure, whether it succeeds or not, the Lisboa Palace will be one of the larger and more beautifully constructed buildings currently under development.

Lisboa Palace

The Lisboa Palace


Read more:  Cotain2.0: Hero or Zero 



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