Two things catch the eye looking out the window on the approach to Macau’s airport. One is a flat scrap of land that now joins the previously separate islands of Coloane and Taipa, dubbed the Cotai Strip. The other is the Venetian Macau, a stout neoclassical structure with virtually nothing around it.
When the Venetian opened in late August, it became the first in a wave of resorts designed to bring a new industry to the territory: meetings, incentives, conferences and exhibitions (MICE).
Of course there will still be gambling – the resort includes a gigantic casino floor with 850 game tables and 6,000 slot machines – but Las Vegas Sands, which owns the Venetian and planned the Cotai Strip (its trademark), has bigger plans.
Space to fill
The Venetian is counting on its 105,000 square meters of conference space – including two floors of four adjoining exhibition halls, each large enough to house a commercial jet – to drive demand for business travelers to come and fill up its 3,000 suites. To keep them there, it will provide entertainment, too: Its 15,000-seat arena will host two NBA exhibition games in October and the Canadian extravaganza Cirque du Soleil will regularly perform in its 1,500-seat auditorium.
These elements – business and wholesome fun – are almost completely lacking in Macau’s more traditional quarter on the peninsula, which continues to cater to China’s hard-core gambling market. This market became the world’s largest when it surpassed Las Vegas in gambling receipts last year, and it shows no sign of slowing down.
But locals and investors alike are wary of being too dependent on gambling, with José Coutinho, president of the Macau Civil Servant’s Association, noting that “Macau has a one-sided economy.”
The numbers support this. Gambling accounts for 70% of government revenue and the majority of GDP. Visitors last year left 75% of the money they brought with them on the game tables, and stayed barely longer than a day each.
Bill Weidner, Las Vegas Sands’ chief operating officer, is betting on MICE-fueled tourism to take off. Though the market is still immature (unlike Vegas, where MICE revenues have long since overtaken gambling), he believes China holds the key to the industry’s future growth.
“Macau is a natural for trade exhibitions. The market relates to China’s advantages in manufacturing,” Weidner told Macau Business magazine last year. “The E in MICE (exhibitions) is the natural advantage for Macau. That’s why we’ve built a large exhibition hall in Macau … We believe if we build a Las Vegas-style convention and exhibition facility, we’ll take the sellers in China and introduce them to international buyers.”
Glenn McCartney, a tourism professor at Macau University of Science and Technology, pointed to increasingly sophisticated mainland industry associations as fertile ground for future trade shows and other MICE events.
“MICE will take Macau to a higher level,” said Robert Kirby, whose company, Kirby Leadership & Hospitality, conducts employee training programs for hotels in Macau.
The business and leisure travelers the Cotai resorts hope to attract, he believes, will stay longer and spend more money per head. Within a month of opening, the Venetian expects 85-95% occupancy and 30,000-40,000 visitors a day.
A challenge Macau will face in courting a new class of visitor will be changing travelers’ perceptions of the place.
“At the moment, most mainland travelers associate Macau with gambling and adult entertainment. Business is way down the list,” said McCartney, who has conducted surveys of travelers in airports in China. Infrastructure improvements will need to come quickly to accommodate the projected arrivals. New air routes, a new ferry terminal and a light rail system have all been promised but are behind schedule.
The 500,000-strong territory will also have to deal with an intense personnel crunch. Employment is already effectively at 100%, but new resorts mean new jobs – 15,000 people are needed to run the Venetian alone, and an estimated 120,000 new positions will have been created in the five years to 2010, said Kirby.
Plenty of cheap and willing labor is available in neighboring Guangdong, but a 90-day wait is needed to employ non-Macanese. And a shortage of skilled managers is forcing many hotels to scour Asia for experienced professionals.
For now, though, everyone is just waiting to see if the Venetian can make the Vegas MICE model work.
“If the Venetian doesn’t make it, we’re all screwed,” as one book store manager put it. “But I believe it will work. The government has such a stake in it succeeding, they won’t allow it not to.”