Middle Class Tourism Expands as VIP Market Slows in Macau

Posted on: January 5, 2014, 05:30h. 

Last updated on: January 2, 2014, 08:20h.

Macau is pulling more of these kinds of Chinese tourists now, and fewer whales, as revenues continue to skyrocket (Image: CNN.com)

Macau – now recognized as the #1 gambling revenue locale in the world – has had another record year, with a $45 billion intake in 2013, a number that represents an 18.6 percent jump from the year prior. And despite the fact that Las Vegas’ improvements from the year before were actually a bit higher than this, percentage-wise, Macau continues to beat out the American gambling mecca by a seven-times-greater input annually.

Welcome, Comrades

But while past years’ growth was largely attributed to the mega-wealthy Chinese whales who came to the Chinese special administrative district to play at opulent casinos such as the Venetian Macao or Galaxy Macau, the most recent year’s upswing has been more thanks to the common man, i.e., China’s middle class and their new access to the neighboring gambling kingdom.

Most credit for this influx of the masses goes to an ever-growing high-speed rail system, as well as a 38 billion yuan (US$6,216,291,171) connective bridge that ties together Hong Kong, Macau and Zhuhai on China’s mainland, which has vastly reduced access time to Macau. That reality, in turn, is allowing for many more day and brief trip travellers to come and spend their money at Macau’s  casinos; new attractions going up in nearby Hengqin Island are also helping to draw larger crowds.

This mass market segment represents tourists who might spend anywhere for just a couple thousand up to one million yuan (US$327-$163,586), and has boosted the coffers of Macau’s casino operators quite generously during this past year. And with only about 4 percent of mainland Chinese having made the Macau sojourn to date – representing some 52 million tourists – industry analysts predict plenty of room for expansion in that arena in coming years

Macau can be thankful for that hoi polloi influx, indeed; because 2012 saw some slowing of the high-roller community, at least in part because certain Chinese government officials were targeted by Beijing as setting a poor example for the masses with their outrageous spending habits.

Growth Slowdown Predicted

Industry analysts predict a growth percentage slowdown in 2014, however; anticipating this year’s numbers to be closer to the 10 to 14 percent mark. They attribute these predictions to there not being any new casinos entering the picture until next year at least, a reality that could lead to casino floors and hotels operating at capacity until then, with no way to accommodate more bodies.

Looking to the tremendous success of Las Vegas in non-gaming arenas in recent years – areas that cover anything from sporting events to lavish nightlife – Macau authorities now mandate that all new gaming tables must be matched by an equal number of non-gaming amenities. Currently boasting 80 percent of its income from gambling alone, no doubt Macau has recognized that a diverse economy is less subject to downfalls than one that hovers solely on gambling intake.

With that vision in mind, Wynn Macau Ltd. is creating a $4 billion resort with, we are told, a floral theme, as well as a man-made lake and sophisticated technology-driven dancing fountains, just like the ones that now dazzle in front of the Las Vegas Strip’s Bellagio. Not to be outdone, competitor Las Vegas Sands Corporation is creating a miniature Eiffel Tower, in what will be called the Parisian, and which will include plenty of luxury retail outlets, as well as a convention center.