Macau Casinos Comped Fewer Rooms in 2015, as VIP Crackdown Blocked High Roller Arrivals
Posted on: July 21, 2017, 04:00h.
Last updated on: July 21, 2017, 04:36h.
Macau casinos reported expenditures of MOP8.8 billion ($1.1 billion) from complimentary guestrooms and free food and beverage service in 2015.
That represents a 12.9 percent decline from 2014, the special gaming enclave’s final year before Chinese President Xi Jinping initiated his anti-corruption crusade.
Over $700 million was spent by casinos on comped hotel rooms, which accounted for 46 percent of Macau’s total hotel room sales.
The city’s Statistics and Census Service reported the hotel room expenditures, but didn’t break down the data by resort. However, it’s largely assumed that the vast majority of the gratis nights were in five-star rooms at properties owned by the area’s six major operators.
A nightly stay in a five-star room averaged around $220 in 2015.
VIPs Kept at Bay
Between 2002 and 2013, Macau casinos saw their gaming win increase each year, and often by drastic measures. A special administrative region to the People’s Republic of China, the enclave pulled in $45 billion in 2013.
But a decision by Jinping to stop the flow of money from the mainland to the enclave, as part of his anti-corruption crackdown, caused Macau to see its first-ever decline in 2014 to $43.9 billion. While the pullback was unwelcomed by casinos, it was only a modest retraction. In 2015, revenues plummeted.
As China began to more closely observe how VIP junket companies were colluding with casinos to bring in high rollers, the federal government realized billions of dollars were being moved out from its highly taxed communist control.
Junket customers buy expensive packages while in China through VIP touring companies. The prices range from a few thousand dollars to over $650,000. Once the high roller is transported to Macau via first-class arrangements, they are welcomed with “free” credit and accommodations that often totals nearly the identical price of their travel package.
With their money essentially handed to them in Macau, a financial tax haven, Chinese nationals have lessened their tax burdens. Regulations place a foreign exchange quota of $50,000 a year on citizens.
Las Vegas More Complimentary
Jinping’s assault on VIP touring companies led to the closure of dozens of junket operators. With less high rollers rolling into town, comp expenses for Macau’s five-star resorts lessened.
While $1.1 billion in comps might seem like a big number, the world’s richest gambling hub gives away less free perks to customers than what visitors to Las Vegas receive. In 2015, the Strip’s 23 casinos divvied out over $1.6 billion in freebies.
Revenue continues to slide in Macau. Gross gaming win totaled $28.7 billion in 2015, and came in at $27.75 billion last year. Macau’s operators have begun to rethink their marketing, and move away from the VIP towards the mass market.
While Macau gaming lost more money last year in terms of annual percentage, Las Vegas casinos posted modest gains. Perhaps the Chinese territory should take a page out of Sin City’s playbook and begin considering comping rooms and food services from time to time for its more blue-collar visitor.
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