Macau, the favorite destination of the world’s gamblers, is broadening its consumer base. It is shifting its focus from the rich and celebrities to the mass market of Chinese gambling. Macau is just a short distance away from Hong Kong. It generated approximately $24 billion revenue in 2010. Seventy percent of this revenue came from affluent Chinese families.
To provide a more rewarding and reliable option, Macau is looking at the newly built world-class casino resorts that target the affluent middle class people of China. This serves the double purpose of promoting Macau as a tourist destination for shopping, sightseeing, and other activities in addition to gambling.
More Affluent Middle Class in China
When Portugal handed over Macau to China in 1999, it became the only part of China where gambling was legal. The wealthy and affluent Chinese started heading for Macau to enjoy a lavish lifestyle and spend money on gambling, which was not possible in the mainland. But this also started the problem of licensed middlemen who financed rich mainland Chinese and they assumed the responsibility of paying off their gambling debts. Due to PRC becoming more active in world trade, the source of funds for gamblers became highly volatile. On the other hand, the Chinese middle class has become more prosperous, therefore a more reliable market for the gambling industry in Macau.
Annual growth of Macau gambling market is estimated to be 27 to 35 percent. Analysts expect that mass market segment will grow by 30 percent in the next three years. It is more than double the growth of the VIP market segment. Michael Joaquim das Neves, the Director of Macau’s Gaming Inspection and Coordination Bureau (DICJ), has pointed out, “ the
VIP market depends on a few numbers of people, whereas mass market is a big number. We prefer and encourage the faster growth of mass market.”
Infrastructure Support to Develop Macau
The travel time between Macau and mainland of China will be significantly shortened by a Guangzhou–Zhuhai high-speed railway network. This infrastructure upgradation will help in expansion of Macau as a tourist and gambling resort. Further access will be facilitated by expansion of the Gongbei gate at the border. By 2015, a light transit railway and a bridge will connect Hong Kong to Zhuhai and Macau.
With all these support and changes, analysts are very positive about the prospects of Macau and its gambling industry. In the current scenario, casino-resorts developers and operators are excessively expanding their presence in Macau and building new resorts. Among the latest projects is the Galaxy Entertainment Group’s new facility, opened on May 15, which costs $1.9 billion.
This Galaxy resort has a 350-ton man-made beach, a multiplex cinema, and a sky-top wave pool among other attractions. Within next 9–12 months, the number of hotel rooms in Macau is expected to increase by 41 percent, which means 8200 hotel rooms. In spite of the massive increase in hotels and resorts, it is expected that these will be fully booked once they come into full operations. Other major companies on the expansion scene are Sands china, Wynn Macau, MGM resorts International, and Stanley Ho’s SJM.