Muhammad Cohen

Category: Macau

  • Hangover awaits Macau after 2012 feast

    Macau celebrated the new year in style. On the first working day of 2013, Macau announced casino revenue for December reached 28.2 billion Macau patacas (MOP; US$3.5 billion), a new record, topping the MOP27.7 billion reached in October last year. December registered 19.6 percent year-on-year revenue growth, the biggest increase since April.

    For 2012 overall, gaming revenue topped MOP304.1 billion, or US$38 billion, growing 13.5 percent from 2011 to set another new record. All this in a year when the traditional growth engine of high roller VIP play sputtered, the long awaited opening of Sands Cotai Central in two star-studded phases in didn’t pack much sizzle, and tourist arrivals barely grew.

    The situation is reminiscent of 2008 when mainland officials first tightened the reins on travel to the Macau, inducing panic and even talk of bankruptcy among casino operators, yet revenues grew 31 percent, topping MOP100 billion for the first time. When licensees gathered for a trade council meeting, one mogul reportedly declared, “Thank God for bad years.”

    This year may not deliver such a happy ending. There won’t be any major resort openings during 2013 (nor, in all likelihood, 2014). Macau’s critical transition to mass market focus is still in its early stages. Vacationers who’ve come once must be convinced to lavish their limited leisure budgets and time again on return trips. That’s a growing challenge as Chinese travelers spread the wings further afield and more Asian destinations add casinos to their list of attractions. Moreover, Macau remains almost completely reliant on mainland and Hong Kong visitors and has failed to blossom in the broader international tourism market.

    This year’s completion of Beijing’s leadership transition could mean tighter controls on money moving across the border into Macau as part of broader crackdown on corruption. However, VIP volume has staged a mild recovery since November as uncertainty over the potential impact of the Xi Jinping regime gives way to the reality of the new team moving into place. That trend could continue as the year progresses.

    Opening of the high speed rail line from Beijing late last year, with an intercity link that drops passengers within yards of the Zhuhai side of the Macau border gate, could boost visitor arrivals. So could operation of a new 24 hour border crossing that’s awaiting approval from Beijing.

    But even if more visitors can come, Macau has to do better at giving them reasons to visit. Many of the pieces are already there. Now it’s about assembling them properly, filling in the gaps, and perhaps the greatest challenge, providing the human software to support the billions of dollars in hardware.

    Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

  • Signs of getting it right in Macau

    Club Cubic was heaving at 1.30am on the last Thursday night in November. Nearly 3,000 of the Pearl River Delta’s most beautiful people gathered on the second level of the City of Dreams resort, a space that in the past has often felt as desolate and forbidding as a New York City subway station during the wee hours. On that night, Psy, the Korean rapper behind the mega-hit Gangnam Style, was in town and Club Cubic was the place to be. Sometime past 2am, Psy took the stage, gave the crowd his song and his horse dance and galloped off, but the party continued. It was a night to remember in Macau.

    During a ten day visit culminating with the late night Psy-ting, there were clear signs that Macau is creating more nights to remember for visitors from China’s growing middle class that are presently driving casinos revenue growth. For more than a year, expansion of mass market gaming has outstripped VIP growth.

    According to participants at last month’s Asian Gaming and Hospitality’s Congress, mass market growth reflects Macau and mainland authorities’ push to diversify the economy away from gambling toward broader tourism and leisure activities, as I wrote in the December issue of Macau Business. Junket business insiders at the conference also offered examples of Beijing’s efforts to curtail VIP play. Whatever the reason, mass market spending is rising in Macau.

    On this visit, it seemed Macau’s casinos resorts had sharpened their game as tourist destinations, getting things right more often than has been their custom. Maybe it was my imagination due to spending hours on massage tables and in whirlpools to research an article on luxury spas for the January edition of Macau Business, and enjoying five-star hospitality at their host hotels. Maybe it’s because resorts that needed to learn have had great examples to follow, such as the intelligent, comfortable room design and equipment at Grand Lisboa and the right resort elements for Asia at Galaxy Macau. But mostly, it may be that resorts, especially the ones in Cotai with huge footprints, need to have more traffic and paying customers to function and feel right. As mass market tourism grows, and more people shop, eat and play in plain sight rather than behind VIP room walls, it’s happening.

    Now Macau needs to take the next step and give tourists who come for a good time reasons to stay for more than a day and keep coming back. Sure, gambling will continue to be part of the mix, but there needs to be more. Psy’s appearance underlined the thirst for entertainment. The Pearl River Delta is looking for a good time, and Macau seems finally to have figured out how to deliver one. Now let the good times roll.

    Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

  • Macau casino revenue numbers hide real news

    Over the past few months, Macau casino revenues have disappointed. October’s new revenue record of MOP27.7 billion (US$3.46 billion), while welcome, represented a modest 3.2 percent increase over revenue a year ago. But behind the numbers, key changes are taking place that will transform Macau.

    After years of increasing domination by VIP players provided by junket operators, for about a year mass market gamblers have been driving revenue growth. As I wrote in the October issue of Macau Business, the trend will show its biggest impact beyond the casino floor.

    A related trend is the swing toward Cotai, covered in the July issue of Macau Business. Three casino operators already have resorts in Cotai, the entertainment area built on landfill between Macau’s outer islands, and this year the government has approved development applications from the other three. By the end of 2017, there will be at least six new developments in Cotai, built for some US$15 billion.

    Things will surely be different by then. But Macau’s shakeup has already begun, with its effect felt as far away as Beijing and Wall Street.

    Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

  • Sands Cotai opens in falling Macau tide

    The world’s biggest Sheraton hotel opened at Sands Cotai Central last week, part of the Macau resort’s second phase that includes a South Pacific themed casino and dozens more retail shops. I covered the phase one opening in April, including an up close and personal encounter with Sheldon Adelson, the chairman of Sands China and its parent company, Las Vegas Sands.

    I’ll be writing more about Sands Cotai Central (SCC) for Asia Times and about Macau casino trends for Macau Business magazine in the weeks ahead.

    Until then, consider that SCC has opened into the teeth of a rare run of slowing casino revenue growth in Macau. The situation resembles conditions facing the 2009 opening of City of Dreams, SCC’s neighbor on the east side of Cotai’s main boulevard, across the Venetian Macao.

    In 2009, the main problem was restricted visas for mainland travelers. In the three years since, Macau has become even more dependent on mainland visitors, and now it’s seeing slowing growth in step with China’s decelerating economy. For better or worse, analysts see Macau resorts becoming more closely tied to the mainland economy in the years ahead. Rather than spreading their bets, it seems Macau’s casinos have doubled down on the mainland.

    Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.