Macau casinos seek resort cure for China gambling hangover
By Farah Master
HONG KONG (Reuters) - As revenue plummets at China's only legal gambling hub, global casino operators have a new mantra - what happens in Vegas, must also happen in Macau.
Diversifying into hotels, entertainment and retail is the only game in town for companies like Melco Crown Entertainment Ltd and Galaxy Entertainment Group. The latter's two new resort projects, worth $3.2 billion, open in Macau later on Wednesday.
Nevada's casino giants blazed a trail in 1999, as Las Vegas sought to shed its 'Sin City' image and become a tourist destination, and non-gaming now accounts for more than two-thirds of total revenue. In Macau, the motivation is different, but urgent - gaming revenue is set to drop 26-30 percent this year as Beijing's unrelenting clampdown on corruption saps appetite for ostentatious gambling.
"We have really focused our attention on things beyond gaming to reach out for a new group of people and tap into new revenue streams," said JD Clayton, president of Melco's Studio City resort project, speaking this month at a conference.
Macau operators have little option but to consider such moves, with gaming still accounting for around 90 percent of revenue. As well as the mainland's crackdown, Macau's government is forcing casino firms, also including SJM Holdings Ltd, MGM China Holdings Ltd <2282.HK), Wynn Macau Ltd and Sands China Ltd, to diversify resorts being built on the Vegas-style Cotai strip by allocating coveted gaming tables based on non-gaming amenities.
Galaxy, whose new facilities include a Broadway-themed hotel, a street food market and a river adventure ride, has been awarded 150 gaming tables - well below the 400 it asked for.
According to company data, Cotai strip casino facilities, which also provide a range of leisure and retail options, make up to seven times more in earnings before interest, taxes, depreciation and amortization than casinos on Macau's teeming main peninsula. Retail has provided a buffer - particularly for Sands - even as gaming table revenue in the territory has slumped for 11 straight months.