Home > > Macau Gaming Giant Worries the Destination Will Go the Way of Atlantic City

Macau Gaming Giant Worries the Destination Will Go the Way of Atlantic City

07/09/2014| 4:33:05 PM|

Macau is facing threats to its growth from China’s slowing economy and greater foreign competition, escalating the need for the world’s largest gambling hub to diversify from its casino gaming roots.

“I’d say the slowdown in the economy and the fact that now the foreign destinations might become competitors” are the biggest risks to Macau’s growth, Pansy Ho, co-chairman of MGM China Holdings Ltd, said in an interview with Betty Liu on Bloomberg Television in Hong Kong.

Chinese tourists travel more frequently and farther afield, the city could gradually lose its appeal, said Ho, who’s nicknamed “casino queen” by local media. “We’re already beginning to see that the customers coming through our doors are more demanding, they now know how to differentiate.”

Chinese tourists have been powering the growth of Macau which leapfrogged the Las Vegas Strip in 2006 to become the world’s largest gambling hub. Casino operators such as Ho’s MGM China and Sands China Ltd. have added shops, restaurants and entertainment shows to draw mainland travelers as high-stakes gamblers cut spending amid a cooling Chinese economy.

Ho, whose father Stanley Ho held a 40-year gambling monopoly in Macau until 2002, is helping lead a drive to transform the city into a global tourism destination. The 51- year-old sees the need to reduce the territory’s reliance on gaming halls that raked in $45 billion of casino revenue last year.

The city has been affected by a slowdown in gambling growth in recent months as bettors cut spending amid a cooling economy and a nationwide crackdown on corruption in China. China’s President Xi Jinping’s clampdown on lavish spending has hurt sales of luxury goods such as Rolex watches and Prada bags.

Shares at MGM China dropped 3 percent to HK$27.75 and Sands China fell 1.7 percent to HK$58.90, while the benchmark Hang Seng Index lost 0.1 percent by 11:38 a.m. in Hong Kong trading. Macau’s July gross gaming revenue could decline as much as 11 percent from a year earlier, Bank of America Merrill Lynch analyst Billy Ng wrote in a report today.

Local FlairMacau’s casinos have borrowed from other cultures to re- create features in the past and now mainland customers can afford to travel overseas to experience the original, “real things,” said Ho, who has a net worth of $4.9 billion according to Bloomberg’s Billionaires Index.

To draw more Chinese patrons, MGM China, the Macau unit of MGM Resorts International, has been adding local flair by playing up the Macanese and Portuguese influences at its properties, said Ho. Sands China competes with Italian singing gondolas and rival Galaxy Entertainment Group Ltd. with Parisian cabarets.

Macau is the only place in China where casinos are legal. Mainland Chinese tourists accounted for two-thirds of the total visitors to the former Portuguese enclave in the first quarter.

New IslandHo is now extending her family’s footprint to Hengqin in China, an island next to Macau that’s connected by a bridge and is earmarked for non-gaming purposes. She will achieve that with Shun Tak Holdings Ltd., a property to transportation conglomerate set up by her father in 1972 and now run by her.

“We’re building hotels, serviced apartments and a shopping center,” Ho said of a $118 million project. “We’re immediately connected to the custom checkpoint, so we’re almost the first stop once you clear customs.”

Stanley Ho, 92, held a gaming monopoly in Macau that helped build SJM Holdings Ltd. into Asia’s biggest casino company. The Macau government opened up the market in 2002 to foreign rivals such as Sheldon Adelson’s Las Vegas Sands Corp. and Steve Wynn’s Wynn Resorts Ltd.

Friendly CompetitorWhile Pansy is in charge at Shun Tak, her younger brother Lawrence Ho, whom she described as a “friendly competitor,” has gone his own way. He set up Melco Crown Entertainment Ltd. in a joint venture with Australian billionaire James Packer.

“For me, I try to step out of my father’s shadow and do something on my own,” Lawrence said in a separate interview at City of Dreams, Melco’s biggest casino in Macau. “I’ve been trying to prove myself.”

The company is building casinos in Macau and the Philippines, and is also keen on expanding into Japan, the world’s third-largest economy. It plans to invest more than $5 billion in Japan if the country legalizes casinos, said the Melco Crown co-chairman and chief executive officer.

Lawrence’s endeavor to push into Japan is part of his strategy to expand overseas as he sees constraints such as land and labor shortage at home.

Melco Crown, which currently operates two casinos in Macau, has almost doubled its revenue to $5.09 billion in 2013 from $2.64 billion in 2010. SJM had $11.3 billion revenue last year from 20 casinos in Macau.

Melco Crown is trading 2.2 percent lower to HK$92.10, while SJM fell 2.2 percent to HK$20.05 at 11:37 a.m. local time.

“Lawrence really wants to grow his gaming enterprise beyond Macau and grow his portfolio,” said Pansy, his elder sister. “In my case, I’d like to really do more for the general well-being of Macau, promoting Macau as a destination.”

Read the original artilce

TAGS: Chinese tourism | Macau | casino
©2022 广州力矩资讯科技有限公司 粤ICP备06070077号
Tell us more about yourself!