Galaxy to add non-gaming elements to boost revenue

PUBLISHED : Monday, 19 March, 2012, 12:00am
UPDATED : Monday, 19 March, 2012, 12:00am


Galaxy Entertainment will double the size of its flagship casino resort on the Cotai Strip in Macau by adding more non-gaming elements, including convention and retail businesses, according to a senior executive.

'The planning of Galaxy Macau was always approached on a more holistic basis and the latest phase will be an integral part of the whole master plan, which was started in 2002,' vice-chairman Francis Lui Yiu-ting told the South China Morning Post.

The gaming industry accounts for more than 70 per cent of the Macau government's revenue and plays a significant role in the city's gross domestic product. But the government is under pressure to widen its income stream if the gaming industry should face a downturn.

One of the alternative revenue sources that Macau could develop is the convention business, said Lui, who envisaged the city becoming an important centre for meetings in the next five years.

'At present, the size of the convention business in Macau is just 10 per cent of that in Hong Kong,' he said.

Mainland officials have difficulties in obtaining visas to visit Macau, but visas to attend conventions are easier to get.

One big obstacle limiting the growth of the business in Macau has been an inadequate public transport infrastructure.

Improvements to the network have failed to keep pace with the huge increase in visitors, leading to severe traffic congestion on the roads.

Last year, there were 28 million visitors to Macau, more than 10 times the number a decade ago. Severe traffic jams during the annual Macau Grand Prix have highlighted the poor state of the city's public transport.

To improve the transport infrastructure, the Macau government has embarked on a project to build a light rail system, similar to the Skytrain in Bangkok. Construction is due to be completed in the next three years.

The system will be ready before the scheduled completion in 2016 of the bridge across the southern Pearl River Delta linking Hong Kong with Macau and Zhuhai.

However, there are doubts about the earning potential of conventions. In its seven-and-a-half months of operation last year, the 550,000 square metre Galaxy Macau posted revenues of HK$16.4 billion, of which non-gaming revenue amounted to HK$697 million.

Some analysts have suggested that having shops and a convention business in an expanded resort could help Galaxy Macau boost the utilisation rate of its gaming tables in the existing casino.

Lui likened the Hong Kong-Zhuhai-Macau bridge to a road connection between New York, Las Vegas and Hawaii. 'Hengqin [island in Zhuhai] could be seen as an extension to Macau when seamless cross-border custom is in place,' he said, and Galaxy was in talks with the local government to invest in a resort on the island.