Macau’s gaming industry is in the midst of rapid expansion, thanks to a surge of new foreign capital. This year, Macau surpassed Las Vegas’ gaming revenues, earning US$6.95 billion to the Nevada gambling capital’s US$6.5 billion. Macau’s gaming receipt totals, in nominal terms, grew by 43.5% more than the previous year in the first quarter of 2006. The city’s casino revenue, which hit US$7 billion in 2006, is expected to grow from US$10 billion to US$15 billion in 2010.
Forget Vegas – Macau is quickly becoming the center of the gambling universe.
In July 2005, the International Olympic Committee named Hong Kong as the host for the equestrian events featured in the 2008 games. For a few days, the city will become home to the dressage, cross country and jumping competitions.
As the only legal gaming city in China, Macau hopes to capitalize on its status to attract Olympics tourists from neighboring Hong Kong.
According to reports by the Macau Government Tourist Office, an increasing number of tourists are coming into Macau from the mainland. Recent statistics show 51% of visitors are mainland Chinese while 32% come from Hong Kong. These figures reflect a growing mainland middle class that is more willing to spend on luxury goods and travel.
It is worth noting that the rapid expansion of Macau’s gaming industry in recent years has also undermined the profit of Hong Kong’s race tracks. For the past eight years since 2005, there has been a 30% decrease in profits, translating to a loss of approximately US$8 billion in revenue.
Last year, Hong Kong saw an 8% increase in visitors to 25.25 million. The same year, Macau’s arrivals rose 17.6% to a total of 22 million visitors. Of these tourists, 22.3% visit Macau with the hopes of hitting jackpots and winning big.
“With bets being planned for the Olympics as well as bets on the actual games themselves, expectations seem high that there will be a runoff from Hong Kong to Macau,” said Ada Chio, communication manager at Mandarin Oriental Hotel Group.
Fresh coat of paint
Macau’s casino boom also means gaming palaces are upgrading their facilities to attract tourists who are expecting more than a motley collection of slot machines and roulette wheels. Wynn Resorts is spending US$1.25 billion to double the size of its Macau operation by 2,323 square meters come the third quarter of 2007. Not to be outdone, the Venetian Macau, run by rival US casino operator Las Vegas Sands Corporation, will offer 3,000 deluxe suites when it opens at the end of August.
Advertising for gaming is still banned on the mainland. In April, Crown Macau ran a television spot in Guangdong province featuring Chow Yun-Fat, the actor whose starring role in the “God of Gamblers” movies in the 1980s helped propel him to fame, subtly promoted gambling. The ad was later banned by officials.
Yet with expectations high, hotels are offering promotions for Olympics viewers to stay in Macau and Hong Kong. On top of that, hotels housing casinos and gambling hotspots for tourists in both cities also host meetings, incentives, conferences and exhibitions, also known as the MICE industry, for corporations.
With the Olympic Games a year away tourism will definitely draw in the profits for Macau’s gaming industry, and maybe even provide a boost to Hong Kong’s horse racing scene.