The first resort hotels of the Cotai Strip – the stretch of reclaimed land that now connects Macau's two islands, Taipa and Coloane – will not be ready until next year. But once the area is up and running by the end of 2007, phase one of Macau's dramatic transformation will be complete. Farewell to the quaint, day-trip stopover from Hong Kong; roll on the big money tourist destination with a mission to outdo Las Vegas.
Tourism, particularly casino gaming, is of course already Macau's lifeblood – an estimated 70% of government revenue comes from gambling alone. Its economic dominance of the Special Administrative Region (SAR), which returned to Chinese sovereignty in 1999, is only going to continue. Hong Kong's horse racing aside, Macau is the only place in China where betting is legal, giving it a captive market of tens of millions of potential punters.
The post-handover government is eager to exploit its advantage to the full, a move Jennifer Welker, author of the recent book The New Macau, believes is the way for it to go. "Just like Las Vegas, which is a desert, Macau cannot offer a whole lot more itself, so obviously tourism and gaming is the best it has to offer," she said.
So far in Chief Executive Edmund Ho's tenure, two key developments – the granting of casino concession licenses to foreign operators in 2001, breaking the 40-year monopoly of Stanley Ho's Sociedade de Turismo e Divers?es de Macau (STDM), and the issuing of tourist visas to individual mainland travelers in 2003 – have jump-started Macau's transition. GDP spiked by 28% in 2004, as 16.7 million visitors hit town – 57% of them from the mainland – compared with 11.9 million in 2003.
Markland Blaiklock, executive director of hotel operations at the soon-to-open Wynn Macau, sees a near-term advantage in being in the established casino area on Macau Peninsula early on. "We wouldn't want to be in Cotai in the first wave, because the second wave would make the whole area something of a construction zone," he said. The general pattern appears to be: open a relatively small hotel in the current main casino area on the peninsula first, whet visitors' appetites while the Strip gets built, then open a much larger casino – or complex of casinos – in Cotai.
Despite being pleased with Macau's economic performance as a model of how "One Country, Two Systems" can work, Beijing doesn't seem to care much for the fact that it is primarily based on vice. But while there is a continuing to push for Macau to diversify its economy into other areas, the local administration is hopelessly attached to the tax revenue the casinos generate, said Fox Hu, a Macau-based journalist. Ultimately, any measures Beijing takes to discourage gaming are unsuccessful.
Macau's tourism bureau hardly gives casinos a mention. Instead, it prefers to promote colonial Portuguese charm, embodied by newly declared UNESCO World Heritage site around the ruins of St. Paul's Cathedral. "Compared with the huge cultural sites people are used to seeing in China, Macau's are very small, so a lot of tourists are disappointed," Hu said. "But that's Macau – everything is small."
Feed the mice
In parallel with the gaming boom, the "MICE" (meetings, incentives, conferences and exhibitions) industry in Macau is about to take off. According to Welker, this too echoes the Las Vegas model. "Las Vegas didn't grow solely out of casinos – it also grew out of meetings. It's the same situation in Macau."
The mega-hotels in Cotai will all include conference space – the Venetian Macau, another Sin City import, will have 120,000 square meters of it, about the size of Hong Kong's convention center.
MICE events matter because they bring in overnight visitors, something which Macau needs – in 2005 the average visitor's stay was a mere 1.18 days. As the number of hotel rooms expands from 11,000 to 30,000 over the next 18 months, it is hoped average stays will move into the two- to three-night range.
The vast majority of Macau's visitors still arrive at the ferry terminal, stepping off the jetfoil from Hong Kong. Macau International Airport serves primarily as a stopping point for flights between Taiwan and the mainland. Only about 800,000 of its passenger throughput of 6 million actually disembarked there last year.
That may change as more business travelers begin to arrive. "Those types of customers aren't going to be willing to fly to Hong Kong and endure a ferry ride to Macau," said Joseph Lo, an executive at Viva Macau, a startup low-cost airline that plans to offer more direct flights to the SAR from other East Asian locations.
Like the rest of Macau, the airline is betting that the next phase proceeds according to schedule. If it does, and the odds are in their favor, everyone could win – big.