GGRAsia – More biz from foreigners hard for Macau casinos say experts

More biz from foreigners hard for Macau casinos say experts

Aug 08, 2022 Newsdesk Latest News, Macau, Top of the deck

Macau’s next generation of casino concessionaires will in likelihood find it hard to meet the Macau government’s expectations on bringing in more foreign tourists, whatever plans licence bidders present to the authorities in time for the September 14 tender submission deadline, several industry commentators remarked to GGRAsia.

Nonetheless, under Macau’s updated regulatory framework for gaming, an incumbent Macau chief executive will have the discretion to reduce tax payable on casino gross gaming revenue (GGR) as an incentive for operators to bring in more customers from overseas. The details of how that would be implemented are yet to be made public.

Even with incentives, a number of hurdles might be faced by operators, said the people spoken to by GGRAsia. These include the way the city’s existing infrastructure for inbound travel is set up, and the fact the local labour market – culturally and language-wise – has in the two decades since Macau market liberalisation, been overwhelmingly geared to serve customers from mainland China and Hong Kong.

Restoring Macau’s direct-flight connectivity to regional destinations beyond mainland China will be a key task, suggested respectively gaming consultant David Green and local gaming scholar Ryan Ho Hong Wai.

In 2019, the immediate trading year before the onset of the Covid-19 pandemic, Macau was linked by air to destinations not only in mainland China, but also elsewhere in East Asia and Southeast Asia. Most of the non-China routes are currently suspended amid Macau’s robust Covid-19 countermeasures.

Macau International Airport handled just above 1 million passenger trips in 2020 and 2021 respectively: just above 10 percent of the 9.6 million passenger journeys via the airport in 2019.

“I believe it will take more than the offered concession term, 10 years, to see an appreciable increase in inflows of tourists from countries outside the existing tourist catchment areas,” said David Green, gaming and governance consultant at Newpage Consulting.

In addition to re-establishing direct regional flights, Macau also needed “more attractive packaging” for promoting the city as a leisure destination for foreign visitors, Mr Green added.

“Hong Kong has become a much less attractive destination for Western tourists… so Macau can’t simply rely on being stapled to Hong Kong in visitor itineraries.”

Referring to potential source markets for Macau that already have legal casino gambling, Mr Green observed that Macau’s own gaming offer “will not be a sufficient drawcard”.

Ben Lee, managing partner at casino-industry consultancy IGamiX Management and Consulting Ltd, raised the language and culture issue, as well as the transport setup.

“Macau had very limited connectivity with the rest of Asia even pre-Covid,” he told GGRAsia. While that was “easily fixed,” what was “harder to rectify” was what Mr Lee termed “our attitude towards non-Chinese or anyone who doesn’t speak Cantonese or Mandarin, and that includes a significant number of overseas Chinese”.

Human resources

Referring to factors including casino operator cost-cutting in a low- or near-zero revenue environment amid Covid-19 alerts and outbreaks, and departure of some foreign non-resident workers for career, social, or family reasons during the more than two years of pandemic restrictions, Mr Lee stated: “With Macau rapidly ridding itself of service staff from other countries, it will be an extremely difficult course to reverse”.

He added that it would also be tough to recast Macau as a global tourism destination “when we don’t have the basic language or cultural skills” required.

It was essential for Macau to have a strategy to bring back and pool sufficient skilled labour to help the city build strong non-gaming tourism products, suggested Glenn McCartney, associate professor in integrated resort and tourism management at the University of Macau.

“We cannot ignore the Covid impact, particularly the fallout on non-resident workers, because a lot of the talent that left” Macau were people that had been engaged in the “event industry,” remarked Mr McCartney.

Macau’s existing edge for drawing visitors was its array of international hotel brands, many housed inside casino resorts, said respectively Mr Green and local gaming scholar Mr Ho.

In the absence of casino junkets that used to “hold a block of hotel rooms” for their gambling clients, “there will be large supply of guest rooms,” said Macao Polytechnic University’s Mr Ho.

“The price tag for a stay in Macau will be more reasonable down the road. Still, quality service is the key to our long-term success and customer retention,” Mr Ho added.

Non-gaming

Bidders for Macau’s next gaming concessions – likely to start operating in January 2023 – are not only required to show how they would boost foreign-tourist numbers for the city, but also give details of non-gaming projects and the economic benefits they could generate, according to the government’s tender document.

Such projects should come from a list of categories. They are: meetings, incentives, conferences and exhibitions (MICE) business, entertainment performances, sports events, cultural activities, health tourism, themed amusements, gastronomic offers, promotion of tourism in local neighbourhoods, and marine leisure activities.

“The non-gaming investments that are being promoted as being desirable appear to be a hotpot of different activities without any apparent cohesion or integration,” said Mr Lee.

Macau, which has a population of under 700,000, should “concentrate on a few key areas” regarding non-gaming offers, and “direct the concessionaires towards them”, Mr Lee suggested.

Stronger support was necessary from the authorities to promote Macau as a “distinctive” destination for travellers from overseas, Mr McCartney remarked.

“We have to come up with a city branding, that has to amalgamate everything between public and private sector… that’s going to be important,” said the University of Macau scholar.