Macau under threat as mainland China gamblers cut spending

Gambling hub needs to broaden appeal as mainlanders bet less amid cooling economy and corruption crackdown, says casino boss

PUBLISHED : Wednesday, 09 July, 2014, 5:19am
UPDATED : Wednesday, 09 July, 2014, 5:48am

Macau is facing threats to its growth from the mainland’s slowing economy and greater foreign competition, escalating the need for the world’s largest gambling hub to diversify from its casino gaming roots.

Pansy Ho Chiu-king, co-chairman of MGM China, said the economic slowdown and “the fact that … foreign destinations might become competitors” were the biggest risks to Macau’s growth.

As mainland tourists travelled more frequently and further afield, the city could gradually lose its appeal, Ho said.

“We’re already beginning to see that customers coming through our doors are more demanding,” she said.

Mainland tourists have been powering the growth of Macau, which in 2006 took over from Las Vegas to become the world’s largest gambling hub. Casino operators such as MGM China and Sands China have added shops, restaurants and shows to draw mainland travellers as high-stakes gamblers cut spending amid a cooling economy.

I’d like to really do more for Macau, promoting [it] as a destination
Pansy Ho

Ho, whose father Stanley Ho Hung-sun held a 40-year gambling monopoly in Macau until 2002, is helping lead a drive to transform the city into a global tourism destination. The 51-year-old sees the need to reduce Macau’s reliance on gaming halls that raked in US$45 billion of casino revenue last year.

Macau has been impacted by a slowdown in gambling growth in recent months as bettors cut spending amid a cooling economy and a crackdown on corruption on the mainland. It is the only place in China where casinos are legal and mainlanders accounted for two-thirds of visitors in the first quarter of the year.

Pansy Ho is now extending her family’s footprint to Hengqin, a mainland island next to Macau that is connected by a bridge and is earmarked for non-gaming purposes. She will achieve that with Shun Tak Holdings, the property-to-transport conglomerate set up by her father in 1972 that she now runs.

“We’re building hotels, serviced apartments and a shopping centre,” Ho said of a US$118 million project.

Younger brother Lawrence Ho, whom she described as a “friendly competitor”, has gone his own way, setting up Melco Crown Entertainment in a joint venture with Australian billionaire James Packer.

“For me, I try to step out of my father’s shadow and do something on my own,” Lawrence said. in a separate interview. “I’ve been trying to prove myself.”
Melco Crown was building casinos in Macau and the Philippines, and was also keen on expanding into Japan, said the Melco Crown chief executive.

It currently operates two casinos in Macau and almost doubled its revenue to US$5.09 billion last year from US$2.64 billion in 2010.

“Lawrence really wants to grow his gaming enterprise beyond Macau and grow his portfolio,” said his elder sister. “In my case, I’d like to really do more for the general well-being of Macau, promoting Macau as a destination.”