Macau’s $15 Billion Bet - Diversifying Tourism beyond Casinos

Author: Matthew Haynes

One of the up-and-coming gambling resorts, Macau, which actually overtook Las Vegas for revenue generated for a time, has announced a forward-thinking plan to introduce an initiative that is focused on diversification as a way to attract more visitors.

Offering visitors a more rounded experience has been recognised as a priority by most gambling destinations, like Las Vegas and Monaco. Even Atlantic City has attempted to follow a similar strategy over the last few years, though focusing on regeneration and upgrading actual casinos has been its main goal.

Of course, Monaco had followed suit over the last couple of decades. Though, It found its identity. Appealing to the uber rich, while also playing host to some of the most luxurious casinos in the world. The UAE is reportedly set to enter this world, and potentially Saudi Arabia, though, time will certainly tell.

Strategic Push Towards Tourism

It is understood that upwards of $15 billion will be invested into Macau by 2030, with some of the leading gambling companies in the world each committing a significant amount towards the project. The aftermath of the global pandemic hit Macau severely from a revenue standpoint, as casinos remained closed long after the rest of the world had essentially gone back to ‘normal’.

After initial explosive growth due to the impact of the Macau’s gambling industry, which attracted wealthy gamblers from China, this has dwindled somewhat and there has been a struggle to get back to pre-pandemic figures.

With six gambling operators having already become a part of this, including Sands China, Wynn Macau, Galaxy Entertainment, MGM China, Melco Resorts and SJM Holdings, the emphasis is on committing their focus at non-gambling activities initially.

It is understood that Beijing is keen for Macau to concentrate on ways to attract a more generic tourist to the area, with gambling (in the interim at least), taking more a back seat.

The idea is that, this will begin to attract more foreign tourists to the resort, such as wealthy Americans and Europeans who will be drawn by having a multitude of things to do and not just gambling, in the same way that Las Vegas has diversified in recent years.

This idea has been greeted with enthusiasm by many within the industry who see the Macau diversification project as a way to yield more of a return on gambling in the long term.

Expanding Beyond Gambling

The government of Macau was quick to lay out specific conditions to gambling operators, prompting them to safeguard local employment, enhance the region’s tourism market overseas, while increasing investment in non-gambling niches such as the general business sector by way of conferences and events.

Certainly, this could work. Developing Macau as a tourism centre can be a contributory factor towards sustained casino revenue growth. Making an appeal to businesses around the world to hold annual events and having the infrastructure in place to facilitate this, could mean that gambling is there as a potential add-on to the experience, without the initial pressure to visit a casino.

Portugal for example, has marketed the potential of its development plan to great effect over the last year. Indeed, for a period of time during the summer, the main square in Lisbon (the capital city of Portugal) became almost one gigantic billboard for the region, with numerous pods as well as a spectacular lightshow emblazoned on surrounding buildings on a night.

Positioning the diversification of Macau around business operations certainly has a ring to it, especially, long term, for the casino cash registers. Without a doubt, if they haven't already, many casinos should be doing deals with high profile businesses, by offering them their own, uniquely designed conference rooms to accommodate such events.

There is no doubt that the authorities in Macau are keen to push the tourism element and market this to its extent. In a statement, the government of Macau revealed: "The tourism bureau has urged hotel industry venues to optimise measures to cope with peak passenger flow."

It should be noted that they have expanded so that staff, shuttle buses in addition to check-in points are also considered among these. This, essentially, illustrates an almost paint by numbers picture and there is nothing abstract about it.

Reinforced by the gambling industry, Macau has big transformation plans. And, maybe Las Vegas should have reason to look over its shoulders. From hotels to shopping complexes that can attract the likes of Gucci to Chanel and back again, plus ice rinks and anything else that can sufficiently and sensibly leverage capable and accessible technology, the potential for Macau is definitely there.

Macau's Ambitious Infrastructure Investment

Las Vegas welcomes 10s of millions of visitors per year through its main airport. Not to mention the numbers by automobiles and, even private helicopters.

Macau, ultimately, needs to be equipped. It means transportational infrastructure, not to mention the engineering, especially for increased internet capacity that comes into play.

The major operators know where their kessef is going. It's short term pain for long term gain, as the fabled saying goes. Investment in logistical infrastructure to increase tourism capabilities the operators know that potential customers can be there and back to their hotel and even the airport fast - this is not the ‘high roller’ gambler.

Offering complimentary add ons such as free WiFi for such transport can only be beneficial, especially in the long term when you factor in repeat custom and retention. The fact that the major casino operators have invested so much in the project suggests that they will have a significant part to play in its development; however, other factors, certainly may come into play.

Despite the Macau government seizing the transformation initiative and, on paper at least, claimed it for their own, casino operators are certainly the behind the investment. While they may have to bow to Macau rule, no doubt the negotiations that have been made afford particular benefits, from a return on investment perspective.

One, can't exist without the other. The casinos for now (from the government's perspective at least), are a by-product for attracting more tourists. A very expensive by-product. However, these are operators which have made billions, the world over. Is it a harmonious relationship? Time will tell.

What Does the Future Look Like?

Should this go according to plan, then certainly Macau could rival Las Vegas, and there is a lot of reason to be cautiously optimistic - even excited.

Attracting the passive tourist will be the difficult challenge. Especially when you think of Las Vegas and the reasons why people go there. It has its standings from movies, theatre, music - it's ingrained in global culture to an extent.

It means that, like for anything, casino operators must play their part, though subtly. More of a focus on soft selling Macau and the adoptive benefits that it offers, can and probably will draw people (a more diverse type of visitor) back into the casinos.

Macau, for all extents and purposes, has it all, political reasons not withstanding. Sheer wealth on its doorstep coming from next door, the cheap access to materials from China to implement the initiatives, in addition to the committed investment from overseas - transparently, the casino operators, themselves, who know that they are investing in the long term.

Initiating entertainment projects to attract visitors, in the same way that Las Vegas has done over the last (long term, few decades - short term, couple of years), could without a doubt be a major factor that contributes towards Macau’s diversification ambitions.

There is no doubt that it will take a considerable amount of time for Macau to change its reputation from being an almost ‘fallen giant’ but the interest proves that the dragon might awaken.