Investment funds are still being poured into Macau despite a dramatic fall in share price for some of the leading Macau players such as Las Vegas Sands. The Las Vegas revolution in Asia may be facing a rockier road than was anticipated. Gambling revenues are still setting records and tourist numbers may be up but an underlying trend is starting to cause concern.

In Las Vegas non-gambling activity is increasingly important for revenue, in many cases comprising at least 50% of company profits. It is a different culture in Macau. The majority of Macau visitors are from Mainland China and, at present, tourist spend on anything other than gambling makes up just 3% of revenue. The Chinese go to Macau to gamble, frequently as day-trippers, and hotel occupancy rates are now below 70%. The casino hotel developments under construction along the Cotai Strip may struggle unless tourists can be encouraged to visit Macau and stay longer. Last month Hong Kong’s Regal Hotels terminated an agreement to build properties with Las Vegas Sands, when it could not negotiate a percentage of gambling revenue.

Competition in Asia is growing for the gambling dollars also. Two casino resorts in Singapore and a probable expansion of gaming in Thailand, the Philippines and Japan will impact on Macau. Hong Kong now has Disneyland to lure tourists and the convention industry away from the enclave. Some development projects in Macau are experiencing difficulty in raising finance. Others are due for completion next year and in 2007, including Venetian Macau and Wynn Macau.

At present Macau is booming and the government Tourist Office intends to make sure that foreigners can find much more than gambling when they visit. The Macau gaming industry is a very long way from being at crisis point, but the Chinese character for ‘crisis’ is composed of the words ‘danger’ and ‘opportunity’. The opportunities are there, and the first warning signs of clouds on the horizon. (E-10.04.05)

© Copyright 2005 CasinoCompendium



>>> return to archives
>>> return to frontpage