“Up until now, 90 per cent of our visitors and 90 per cent of our revenue comes from China … We basically are a hub to attract mainland Chinese gamblers,” Macao-based gaming analyst Ben Lee told AFP.
“So the Macao government is obviously being pushed to try and redirect the industry away from China.”
Until recently, the renewal of concessions seemed like a done deal for the six companies permitted to operate casinos, which include the subsidiaries of three Las Vegas giants – Sands China, MGM China and Wynn Macau.
But at the last minute, a surprise contender, Malaysia’s Genting Group, threw its hat into the ring.
With the concession renewal taking place at a time of spiralling tensions between Washington and Beijing, Lee posits that one of the US companies may well lose out.
“Why would (China) let the Americans keep 50 per cent of the gaming industry in Macao,” said Lee, founder of Macao gaming consultancy IGamiX.
“I cannot see any good reason.”
INDUSTRY SHAKEUP
Macau’s government has long been keen to diversify away from gaming into tourism and leisure.
For the new concessions, it is demanding “much more non-gaming investment”, Credit Suisse analysts wrote in a research note last week.
“An increase in investment commitment would inevitably put more stress into the already stretched balance sheet of certain operators, as well as lowering the long-term margin for the sector,” it added.
For Macao’s 680,000 residents, the cycle of lockdowns, testings and border closures have been some of the roughest years since the handover in a city where one in five people in the labour force works in gaming.
The biggest test came in July when much of the city, including casinos, was locked down to fight an outbreak of the Omicron coronavirus variant.
“It was an extreme situation for a relatively free and open city like Macao,” former lawmaker Sulu Sou told AFP, adding that the economy emerged from the lockdown “on life support”.
Tam, the former Suncity worker, said she took a one-third pay cut to land a new secretarial job, adding that similar openings were routinely advertised with a monthly wage of just $1,100.
Even if Chinese tourists return en masse under tentative plans to kickstart tour groups in November, Macao’s gaming revenue this year will only be 15 per cent of 2019 levels, while the following year will reach 35 percent, according to Credit Suisse estimates.
“In the last two to three years, COVID-19 has really put a spotlight on the need to diversify,” said Glenn McCartney, an associate professor in integrated resort and tourism management at the University of Macao.
“(Diversification) won’t happen overnight, it’s a slow progression.”
Source: CNA
