Macau is known around the world as the gambling location which provides the best opportunities for gaming and entertainment since it is the largest hub or casino developers. Millions of tourists from around the world make their way to the Special Administrative Region of the People’s Republic of China in order to give their luck a try and see what the gaming industry has up for grabs there. Most of the leading casino developers have their operation there and they enjoy the attention of tourists and players from near and far on a daily basis.
This is also the only location which allows Chinese residents to participate in gambling activities within the borders of the country, meaning that many tourists from mainland China feel free to make their way to the autonomous region on the south coast of the country. Along with the typical gaming enthusiasts which could be seen in any given casino venue in the world, there are also the high rollers, which are on the look for bigger and better opportunities for spending money and generating even more at some of the gambling facilities.
High Rollers Bring VIP Revenue
They are also known as VIP players, and for their convenience, there are special VIP sectors of the gaming venues, which have premium gaming conditions on offer, as well as a different more luxurious environment in general. One of the most common types of tourism is organized by the junket operators which make it possible for VIP players to make efficient gaming trips to Macau and to participate in gaming activities. However, this is not as profitable for Macau’s casino operators as one would expect it to be since roughly half of the profits from high rollers are bagged by the said junket promoters.
Following a period of retrenchment, this sector is once again seeing an upwards direction of development, along with the gaming field in the region as a whole. Even though according to analysts in the field, VIP players bring the largest chunk of gross gaming revenue to the gambling locations in Macau, there is also the mass market gaming enthusiasts who should be taken into account. High rollers might have helped bring Macau back to life after the crisis back in 2016, but in order to retain its current steady growth, developers in the region have to focus more on the rest of the players.
Tourists from around the world could be considered part of the mass market gaming sphere and they are the ones that are going to provide the steady inflow of cash for the casino developers. According to information issued by the analysts at Morgan Stanley this Tuesday, the mass market has seen quite the growth in the recent weeks since the beginning of this year. As it was confirmed, during the first month of 2018 there was a 36.4-percent jump in the gross gaming revenue of the gaming hub in comparison to January 2017.
This means that casino locations have managed to amass some MOP26.3 billion. If we have to take into consideration only the mass market sector, there was a 30.6-percent year-on-year surge and at the moment it amounts to MOP11.1 billion. Even though the VIP gaming revenue saw a 41-percent rise, the analysts from Morgan Stanley sustain the notion that some of the amassed revenue should be considered mass market such instead. If their stance is taken into consideration, this would mean that mass market players and tourists have generated larger revenue than high rollers.
Mass-market tourists and players could provide a more sustainable source of revenue for the casino developers in Macau, because apart from gaming in the casino facilities and utilizing the gambling offerings, they are willing to spend money in the non-gaming sector as well, such as hotel accommodation, food offerings, and more family-friendly entertaining. In the meantime, high rollers are used to receiving these perks for free as a bonus to their gambling spending trips. There is also the factor that there are relatively few high rollers than there are mass market tourists and players.
Plans for Diversifying the Area
The authorities are willing to explore a more family-friendly branch and apply this approach to the gambling hub, which is why casino operators are encouraged to develop their non-gaming offerings and elevate the customer experience in that sphere to the next level. It could be recalled that back in 2014 China went through an anti-corruption crackdown which affected gaming revenue in a negative way, and this is the main reason why the authorities are willing to work on different revenue sources development.
In Macau’s Five-Year Development Plan – a package of policies and initiatives covering the period 2016 to 2020 – the city’s government stated that Macau casino sector non-gaming revenue should account on average for at least 9 percent of all revenue generated by Macau operators by 2020. The shift to mass-market gaming is needed, especially following the plan launched by Chinese President Xi Jinping. Last year he gave green light to a nationwide crackdown on corruption which immediately resulted in Macau’s gross gaming revenue plunge.
In order to sustain its development, Macau has to focus on diversifying its offerings and follow the example set by Las Vegas. Providing tourists with more options for entertainment will also ensure that they remain in the area for longer. About half of the tourists which visited Macau over the span of 2017 have stayed in the flashing location not more than a day or an average of 1.2 nights. For reference, tourists interested in spending time in Singapore, which is in the same relative area, have opted for four nights on average, since the two casino resorts are not the only pastime activity available there.
In Conclusion
Macau is willing to diversify its revenue sources and looking further than gambling activities seems to be the way to do so. The government is considering its options for branching out and as a result, casino developers are prompted to seek ways in which to introduce more mass-market gaming revenue to their gross gaming revenue statistics. Mass market is considered a more sustainable and guaranteed source of revenue, as it includes non-gaming expenses as well as gaming ones and it has the potential to secure steady revenue flow.
