It’s been three years since the arrest of Alvin Chau, chairman of Suncity, which marked a turning point for Macau’s junket promoters. The combination of the pandemic and Beijing’s stringent measures on overseas gambling and illicit money transfers, alongside the push to reduce Macau’s dependency on casinos, has led to significant shifts in Asia’s gaming industry.
VIP gaming, once the powerhouse of Macau’s revenue generating 70% of its total and peaking at $29.8 billion in 2013, dropped to $14.2 billion in 2019, and is projected to be just $3.3 billion this year, according to Morgan Stanley Asia’s Praveen Choudhary. Macau’s overall gaming revenue is predicted to hit $28.4 billion, falling short of 2019’s $36.2 billion and far behind the 2013 peak of $45.1 billion. This trend is mirrored in other China-facing destinations across Asia, post-Covid.
Casino operators are adjusting to these market realities, a process initiated a decade ago as China’s strategic directions became apparent, yet much remains to be done.
**Trendy Contradictions**
“Much has changed,” remarks Mary Mendoza, managing director at Platinum Consulting Group. Her insights from Macau spotlight two opposing trends. “There’s an influx of mass-market tourists, but their spending is minimal. They mostly capture photos and seek free offerings, preferring to stay in hotels in Zhuhai and Hengqin, just a ferry ride away from Cotai.”
Conversely, Mendoza observes, “Mass gaming floors don’t feature tables beneath HK$1,000 (US$128). The strategy seems to be channeling lower-level players toward electronic games, reserving live tables for higher-spending patrons.”
Seaport Research Partners’ Vitaly Umansky refers to this shift as the “premiumisation of Macau and its clientele.” For instance, Sands China revamped Sands Cotai Central—as of 2012—under the name The Londoner Macao, aligning it with its Venetian and Parisian themes.
**From Plain to Pizzazz**
Umansky reflects on how The Londoner transitioned from an overlooked venue. “Spending was low despite more hotel rooms than the Venetian Macao and an almost equivalent gaming space, yet it yielded minimal revenue.”
“The venue now has a greater allure,” says Paul Heretakis of Westar Architects regarding The Londoner. “If you visit Macau briefly, it now ranks among the essential stops.”
For accommodations, the transformation from Sands Cotai Central to The Londoner involved enhancing the current Holiday Inn and Sheraton into The Londoner and Londoner Court, with larger suites and fewer rooms overall, scaling back from 6,000 to about 4,500.
As Kevin Clayton, a former executive at Galaxy Entertainment and Sands China, phrases it, they are prioritizing quality over quantity to meet the demands of high-value customers, especially in the premium gaming sectors. Despite its importance, the Meetings, Incentives, Conferences, and Exhibition (MICE) sector isn’t generating the expected turnout from a decade ago.
**Beyond Budget Tourism**
“Mass tourism isn’t synonymous with budget tourism,” states Andrew Klebanow of Klebanow Consulting. The recently introduced suite at The Londoner Grand will permit Sands to attract less price-sensitive tourists, thus generating higher revenue through hospitality and other activities.
There will always be economical lodging in Macau, although not at The Londoner. Premiumisation is achieving success in Macau; October’s mass gaming spending exceeded 2019’s by 12%, driven by higher individual spending. Non-gaming spending for the first three quarters of 2024 saw a 7.5% rise over 2019, despite a 16.5% decrease in tourists.
Visitor spending outside of gaming accounts for about a quarter of Macau’s income, which, even as it surpasses its pre-pandemic level, remains modest compared to Las Vegas’s two-thirds. Nonetheless, Macau’s non-gaming progress partly arises from reduced gaming spending.
Notably, Macau operators’ combined 2024 EBITDA of $8.1 billion is predicted to dip 18% below 2019’s level, though margins have slightly improved, according to DS Kim of JP Morgan.
**A Distant Disneyland**
Despite desires to pivot Macau towards a Disneyland scheme, “Revenue and profits remain elsewhere,” notes Sudhir Kalè of GamePlan Consultants. “Macau will stay gambling-centered for the foreseeable future,” he affirms.
Macau faces a long journey to develop a non-gaming infrastructure aligned with government aspirations. Las Vegas exemplifies such diversity, with its expansive theaters and continuous hotel occupancy fueled by sports and entertainment.
In gaming, large casino reimagining is required, such as with Venetian Macao’s 50,000 square meters, to integrate non-gaming attractions, advocates Paul Steelman, CEO of Steelman Partners.
**Non-Gaming Innovations**
Resorts World Genting’s Bar 360 provides a model, placing entertainment centrally on the gaming floor. Inspired by its predecessor in Manila and echoed in New York, this concept exemplifies how gaming and other attractions can coexist.
Steelman emphasizes gaming as part of a holistic attraction rather than isolated. “Asian casinos usually integrate gaming with retail and hotels, guiding non-gaming activities to engage various customer tiers, from mass market to elite dining.”
**Game Perceptions**
Steelman elaborates on shifting preferences, especially among younger Asians who now pursue Las Vegas-type holidays full of diverse activities over continuous all-night gaming.
In 2003, Sands Macao’s design acknowledged this difference—seeing gambling as more competitive in Asia than in the West. “Now, younger gamers still see gaming as sport but desire a full experience akin to Vegas.”
He predicts the blending of sports, conventions, and experiences designed to captivate through captivating digital displays, as seen with Inspire Aurora’s Digital Street in Mohegan Gaming’s Korean venture.
**Converting Attention to Revenue**
Mendoza identifies ensuring social media enthusiasm translates to financial success as a key challenge. As gaming incorporates expansive branding experiences, Clayton notes they play a crucial role in marketing as customers share them online, spreading the brand’s allure.
Heretakis concludes, adapting Macau’s focus to appeal to various segments can rejuvenate the market. Nikau Design Group’s Nicola Greenaway supports restructuring gaming spaces to enhance fluidity and engagement while leveraging technology to enhance overall player satisfaction.
**Strategic Shifts**
Advanced player tracking technology helps casinos accurately record player behavior, counteracting inadequate traditional rating systems, comments Sudhir Kalè. This improved system allows for precise participant rewards based on theoretical losses rather than outdated measures.
Mendoza’s research highlights diminished returns for gaming incentives, proposing tournaments and shared gaming and non-gaming promotions as more effective approaches. Clayton adds exclusive launches and exquisite events can enhance Macau’s draw.
Steelman, reflecting on customer databases in Las Vegas, advises broadening Asian casinos’ focus on cultivating valuable client relationships rather than merely boosting visitor numbers. Heretakis reminisces about Macau’s heyday, admitting it’s becoming more competitive like other global environments.