Macau Set to Out-Strip Vegas Profits

Macau is minting money as the Asian resort destination could soon outdraw Las Vegas as the world’s top gaming destination. Fueled by growth of both new casinos and non-gaming amenities, the destination is predicted to top more than $8 billion on 2007, according to a forecast by Globalysis.

Macau is a hot spring of casino development with more than $20 billion in projects on the table and will add more than two dozen new gaming venues during the next five years.

A new Globalysis report notes that factors such as a strong macro-economic activity, robust tourism industry capital investments, increasing disposable income figures from countries such as China, and expected increases in direct airline service into Macau from low-cost carriers (LCCs) will all contribute to the market‘s huge growth potential. One such airline, Macau Asia Express will begin flying to Asian and Chinese cities in the fourth quarter of this year.

In addition, many travel restrictions have been lifted for mainland Chinese which has helped to propel arrivals in Macau during the last few years. Macau had a total of 18.71 million visitors last year, compared to 16.67 million in 2004. Visitor arrivals rose 40% in 2004, thanks in part to a relaxation of China's travel rules that allowed mainland Chinese to travel more easily to Macau. In 2005, visitors from the mainland accounted for 56% of the total, or 10.46 million.

"Macau will continue its transformation into a holistic leisure tourism destination in 2007,” said Jonathan Galaviz, a Globalysis partner. “We believe that Macau's casino gaming revenue in 2007 will be driven by substantial growth in non-casino amenities such as new convention center venues and innovative entertainment options incorporated into Macau's fresh Las Vegas style integrated resorts."

One of the world’s oldest casino destinations, the market used to be controlled exclusively by Stanely Ho who had a stranglehold on the region for more than 40 years. In February 2002 the special administrative government issued a trio of permits allowing select companies to develop an unlimited number of casinos for 20 years. 




Ho got one permit. The other Two winners -- Steve Wynn and Sheldon Adelson – were quickly given permits. Adelson’s Las Vegas Sands Corp has gone on to build the Venetian Macau while Steve Wynn will debut his $1.2 billion resort next month.

Adelson’s Sands Macao, the first Las Vegas-style casino to debut in Macau, opened in October 2004. A second development the Macao Venetian Casino Resort should open early next year. The property -- modeled after the extremely successful Las Vegas casino of the same name will have 1,500 suites when it debuts and will add another 1,500 when warranted. It will also have 546,000 square feet of gaming space, one million square feet of gross retail space and 1.8 million square feet of meeting and convention facilities.

Like Hong Kong, Macau is a “special administrative region” of China. That means it has a higher degree of autonomy than other Chinese territories. Macau is a former Portuguese colony founded as the first European outpost during the 16th century. It was returned to China in December, 1999. The Chinese government promises a minimum of 50 years where this region will enjoy special status in all matters except foreign affairs and defense.

Macau is only 37 miles from Hong Kong and more than half of all arrivals were from there. Twenty Nine percent were from mainland Chinese and 14.1 % were from Taiwan. Other major visitor segments came from Japan, South Korea and Southeast Asia. Only about 10,000 people a year arrive from North America. There are more than one billion people within a two-hour flight of Macau.

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