Mass market tourism was supposed to be key to the city’s recovery after it was hit by the slowdown in the Chinese economy. But it is the return of the usual suspects – VIP gamers – that is doing most to reboot its fortunes
Batman rides, water slides and scale models of landmarks like the Eiffel Tower – it was attractions like these that were supposed to represent the future of Macau. Gone was the city’s past as a destination reliant on high-rolling gamblers, in its place an image of nirvana for middle-class tourists who came for the fun and the spectacle – then lingered to bet a few bucks.
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That was the vision of government officials, casino operators, financial analysts and tourism experts when Macau’s overreliance on high-rolling gamblers – “VIP players” in casino speak – hit the seemingly unsurmountable stumbling blocks of a slowing Chinese economy and a crackdown on corruption by Chinese President Xi Jinping ( 習近平 ). The city endured a two-year slump from June 2014, during which time it rethought its target audience, adding 8,200 new guest rooms and HK$100 billion of hospitality hardware in Cotai, most of it – like the half-scale Eiffel Tower and theme-park style attractions – aimed squarely at the mass market.
The Parisian Macao’s half-scale Eiffel Tower. File photo
Yet, while that investment has undoubtedly helped, it is revenue from another source that is doing most to drive the city’s recovery – that of returning VIP gamblers.
June marked Macau’s 11th straight month of rising gross gaming revenue (GGR), following 26 months of year-on-year declines. The rebound has been dramatic and dynamic, so much so that analysts called June’s 26 per cent rise to HK$19.4 billion a disappointment. Over those 11 months of recovery, GGR has risen 13 per cent to HK$217 billion, but since the start of this year, VIP revenue has grown faster and the trend is accelerating. In this year’s first quarter, government figures show VIP revenue – from high rollers in private rooms, often playing on credit provided by the casino or junket promoters – grew 17 per cent, double the rate for mass market revenue from the main casino floor. A second-quarter breakdown from Macau’s casino regulator will be issued later this month.
Dealers wait for customers inside Melco Crown Entertainment’s City of Dreams in Macau. Photo: Reuters
Most analysts contend official numbers overstate VIP revenue and rely on other sources including casino operators. But even Union Gaming’s managing director in Macau, Grant Govertsen, long a cheerleader for Macau’s mass-market future, concedes that VIP revenue is now growing faster. Rather than a “mass led” recovery, Govertsen now calls it “mass anchored”.
