“It’s time for operators to reconstruct and refurbish existing equipment, and each redevelopment will cost billions of dollars. Otherwise, tourists will simply go elsewhere.” Says Macau-based scholars

Macau Business | July 2022 | Special Report | Games in Macau: A New Era

In the second of four public consultation sessions to discuss game law changes hosted by the Government of Macau, the public asked for an explanation of the meaning of non-gaming.

In response, Lio Chi Chong, Deputy Director of the Game Inspection and Coordination Bureau (DICJ), said: We are seeking more feedback on how to define non-game elements. “

This definition may be well understood by the time open bidding begins, but it seems certain that the government is currently facing a dilemma.

“In general, concessionaires will invest in non-games the more profitable they are,” agrees in a statement, Professor Changbin Wang, director of the Gaming Tourism Research Center at Macau Institute of Technology. Macau business..

Market expert Aridad Tash agrees: That makes sense, but it’s difficult to succeed, especially if you don’t have enough GGR and EBITDA to support your gaming company. “

Kevin Clayton, former CMO of Sands China and Galaxy Entertainment, is more specific and Asia Gaming Briefs: “After more than two years of spending cuts, including marketing, there is little willingness to increase resort advertising and promotions for some time. Instead, marketing investments have a direct impact on revenue and continue to focus on relationship management. Place. “

“In general, concessionaires will invest in non-gaming investments if they are profitable.” – Changbin Wang

A recent IMF report said, “The collapse of economic activity. [in 2020]It highlighted that Macau SAR is overly dependent on the gaming industry, mainly due to weak exports of services. “

“To close the gap in skills composition and overcome barriers to economic diversification, we need a multi-faceted package of structural reforms. To advance the government’s diversification agenda, digital infrastructure, public institutions We need to build skills and invest in infrastructure, such as improving effectiveness and improving the business environment, “continues the report.

Ryan Ho, a lecturer at the Center for Game Tourism Research, Macau Institute of Technology, explains: “The COVID-19 outbreak has confused the local gaming industry and Macau casinos haven’t recovered yet. Aside from the pandemic, it’s still unclear if future concessions will reduce profitability, but it’s true. What is important is that a mass market-oriented business model is definitely more sustainable in the long run for Macau casinos.

“The focus of our business will gradually shift away from the junket model, but it will take some time for the casino’s total revenue to return to pre-pandemic levels,” Ho added in a statement. Macau business.. “The mass market relies on a stable flow of tourists and their sponsorship. Most operators have made considerable efforts over the past 20 years to develop non-gaming equipment to attract guests. It’s time for operators to reconstruct and refurbish existing equipment, and each redevelopment will cost billions of dollars. Otherwise, tourists will simply go elsewhere. “

In this regard, a government proposal is made to consider reducing the total effective tax rate of Casino GGR. This is one of up to 5 percent points if the city’s casino industry can attract players from outside China.

By the way, the measures consistent with the previous policy speech by Ho Iat-seng, who accused the tourism industry of over-focusing on Chinese tourists.

“Hengqin doesn’t need a more general hotel.”

“Rather than simply replicating the Las Vegas concept, Macau needs to develop a model that best suits the local situation and environment. The Greater Bay Area Initiative will integrate the economy with the mainland of Macau. It will be deepened and expanded. Casino operators and other tourism businesses will benefit from China’s rising middle class and demand for tourism products, “said a lecturer at the Game Tourism Research Center at Macau Institute of Technology. Ryan Ho explains.

He says Macau business“Macau-based operators and others can work with Hengqin’s counterparts to offer an all-inclusive vacation package that includes transportation, accommodation and activities. Macau and Hengqin offer a variety of tourism products. Can complement each other in their supply and market Macau-Hengqin as a potential tourist destination for domestic and foreign tourists. “

“Sport tourism may be a good example because this type of leisure-based travel attracts spectators and participants to a particular destination. In contrast to building a new arena, Macau is a Yokokoto. We can partner to host national and international sporting events. “

Ryan Ho expects non-gaming investments to be made by Macau-based casino operators and other local businesses. “This will definitely help the diversification process, along with the regional economic integration initiative.”

However, “Macau and Hengqin need to function better as a complement, not a competitor, in order to provide tourists with a unique multicultural experience. Hengqin does not need a more general hotel. The already crowded accommodation market. Non-game investments such as theme resorts and attractions are differentiated from other investments, providing a strong connection with Macau and ultimately attracting more visitors. You need to attract to the jumping ground. “

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