In Markets

Are Macau’s glory days returning?

Venetian Macau

Macau’s gaming sector rebounded in 2017 with total visitor arrivals growing 5.1% year-on-year. With increasing visitors, gaming and retail sales has rebounded dramatically however distribution of these gains has not been equal.

SEE ALSO : Prada Station pop-up at Galaxy Macau

During the fourth quarter of 2017, Macao has experienced record sales with an increase by 12.6% compared to the previous year. This impressive recovery takes place just two years after the 2015 crisis during which sales dropped by 80%.

Operators, retailers and the government seem to have found the good recipe to attract people and make them stay in Macao.

Macao’s hotels have become attractions by themselves. They propose a wide range of accommodations and a large variety of facilities such as swimming pools, restaurants, fitness centers, shopping centers… “40% of visitors choose their place to stay in Macao based on retail and dining options” said Olivier Tong, Head of Retail at JLL.

On top of that, the average 5-stars hotel price in Macao is 45% cheaper than Hong-Kong.

These two strategies definitely improve customers’ experience in Macao and clearly have the same objective: make visitors stay longer in Macao. And it seems to work because Macao has recorded an increase of 22.2% of overnighters compared with 2015.

Casino operators are diversifying their business by offering more shopping options to their clients. The highest revenue growth rates have been recorded in casinos with the highest retail surface.

The government is also aware of its past as a destination for one-day trippers. This is why it encourages developing nightlife and non-gaming activities. Every year, the Government is involved in the organization of important events such as the Light Festival or the Macao International Parade.

SEE ALSO : DFS welcomes AllSaints to Macau

It also would impose non-gaming commitments to casinos to enable them to renew their gambling license. For instance, non-gaming revenue must reach 9% of total revenue to meet the government’s commitment. This new rule would offer great opportunities for many brands to make business in casinos like the recent Prada pop-up at Galaxy Macau.

Thanks to all that, Macau is experimenting a strong economic recovery with a VIP-gaming, which is “much healthier” according to Olivier Tong, representing 56% of overall gaming. But operators, retailers and government still need to make this recovery sustainable.

Contributor: Quentin Mauriac

Quentin Mauriac is a EDHEC Business School Grande Ecole Program student. He is currently an intern for Financial Planning & Analysis at Bluebell Group. Prior to Bluebell, he was an intern at Credit Mutel – CIC bank as Investment Advisor Assistant, and Internal Controller at Cdiscount, a leading e-commerce retailer in France. During his studies at EDHEC, he also had the opportunity to manage a 36-members team as President of EDHEC Jobs Management, a provider of marketing and business services to large companies such as LVMH, Danone, P&G, etc. Following his internship at Bluebell, Quentin will pursue his international experience in Germany where he will complete his Master degree and take the CFA certificated examination.

 

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