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There has been lots of talk recently that Macau has reached its max; can there really be any more room to grow? As the one place in China where people can legally gamble in casinos the region is a mass of casinos and hotels as demand continues and supply keeps up. Three new resorts are set to open in Macau over the next three years, with the number of hotel rooms increasing by 100% in tandem.
So How Long Will the Demand Last?
Right now there is no sign that the appetite for Macau’s charms is diminishing with the high rollers continuing to flock there. In fact casinos are actually branching out to attract more top end visitors. When the foreign casinos were first allowed into Macau in 2002 they were still finding their feet and forged alliances with junket companies who brought the high fliers to the region and provided their accommodation.
By 2013 this service was costing the casinos in excess of $13 billion in commissions to the junket operators. Their wish to cut out the middleman is understandable and has seen them provide private jets and limousines for their valued customers as well as complimentary accommodation in luxury suites.
Two thirds of the gambling revenue in Macau comes from the elite gamblers and with 12 years of experience and relationship building under their belts the casinos now have a substantial list of clients to whom they can provide the luxury experience directly. It doesn’t look as though the VIP flood is going to subside anytime soon.
The Effect of the Corruption Crackdown
The BBC in the UK recently reported that the Chinese government’s corruption crackdown could costs the country as much as $100 billion in economy decrease in 2014. So where does Macau stand in all this? Edward Tracy (CEO, Sands China) recently commented to CNBC that as the casinos centre their interest on the mass market the crackdown would have little effect.
The Future Looks Bright
With the continued architecture growth coupled with the emphasis on attracting the money men to Macau, there seems to be no obvious indication of any decline. Add to the mix the opening of a bridge and tunnel system in 2016, to connect Macau with Hong Kong and Zhuhai, and it would seem you have the perfect recipe for a successful future for the area.
