Creating a family-friendly environment
Casino operators in Macau are turning their attention to non-gaming attractions in an attempt to become a family-friendly destination.
The move is likely because operators’ licenses are due to expire in March 2022. But in order to have a chance of renewing them, they have to demonstrate efforts to diversify. As a result, gambling companies are pledging to spend around $10bn (£8bn) on non-gaming offerings, reports the South China Morning Post.
Beijing is keen for Macau to rebrand itself as a family-friendly destination, but the casino operators’ pledge may see some losers. According to analysts, it’s likely that of the establishments that will be able to weather any losses, operators such as Sands China and Galaxy Entertainment are a few examples.
This is partly because Sands has David Beckham, a British soccer player, as an ambassador. It also has French and Italian themes, whereas Galaxy has a wave pool and cinema, all of which have proven to be quite popular as non-gaming activities.
Grant Govertsen, managing director at research firm Union Gaming in Macau, said: “It will be the best and brightest gaming operators to be able to defend themselves.”
More art on the menu
In the opinion of analysts, though, the likes of SJM Holdings may struggle to achieve high returns. This is due to its poor operational efficiency and a low number of non-gaming attractions. It is, however, taking steps to boost its rankings with a 1,900-room resort in Macau, with an emphasis on non-gaming offerings.
Presently, revenue from non-gaming activities currently accounts for between 2% and 20% of operators’ total net revenue. Officials in Macau are keen for this to increase to 40%. In comparison, Las Vegas operators’ make 60% on the revenue of their non-gaming offerings.
However, while venues have traditionally stuck to food, drink, and accommodation for their non-gaming revenue, officials in Macau want to see more entertainment and art. Because of this, Galaxy, Melco Resorts, MGM China, Sands, SJM, and Wynn Macau are working with the government to create the biggest art and culture affair in the region this June.
Up to now, making money from non-gaming activities has been hard in Macau. However, with licenses due to expire in 2022 and warnings that operators will have to diversify to renew their permits, this may be the motivation many need to achieve their non-gaming goals.
Considered one of the largest gambling jurisdictions in the world, Macau is a popular retreat for millions of people. It’s also a competitive environment for operators.
In order to ensure that casinos are on equal footing, the Macau government has taken steps to extend the licenses of two casinos, MGM China and SJM, which are valid until 2022. According to a report from mid-March, the reason for the extension was to put the two operators on the same expiry timeline as Galaxy, Melco, Sands, and Wynn Macau.
With the ongoing trade war between the US and China it will be interesting to see what impact, if any, this will have on money brought into the region after 2022. Investment banks are predicting that there will be an economic slowdown following the economic dip seen in China.