Inside Asian Gaming

inside asian gaming March 2015 14 Cover Story as a leading MICE destination. In Macau, there’s already sufficient capacity to hold the biggest MICE events at Venetian Macao, but not enough hotel rooms to accommodate attendees of large-scale events. There are an estimated 150,000 hotel rooms in Las Vegas, compared to only 28,000 rooms currently available at Macau’s hotels and guest houses, of which 18,000 are categorized as five- FY 1984 58.63% 16.10% 11.41% 7.71% 6.14% FY 1990 57.84% 16.81% 11.20% 6.04% 8.10% FY 1994 55.19% 18.14% 11.41% 5.04% 10.21% FY 2000 45.94% 23.35% 12.34% 4.91% 13.46% FY 2004 41.94% 25.37% 13.92% 5.45% 13.32% FY 2010 38.97% 23.43% 15.19% 6.86% 15.55% FY 2014 36.75% 26.07% 15.42% 7.37% 14.39% Gaming’s Waning on the Las Vegas Strip Las Vegas Strip Casino Resort Revenue by Department (Share of Total) Source: Center for Gaming Research, University of Nevada, Las Vegas Gaming Rooms Food Beverage Other star. Over the next two years, close to 12,000 new rooms will come online at new Cotai resorts developed by Macau casino operators, including Phase 2 of Galaxy Entertainment Group’s flagship Galaxy Macau (1,300 new rooms, suites and villas), Sands China’s Parisian Macao (3,000), Melco Crown’s Entertainment’s Macau Studio City (1,600) and the extension of its flagship City of Dreams resort with a fifth hotel tower (780), Wynn Macau’s Wynn Palace (1,700), MGM China Holdings’ MGM Cotai (1,600) and SJM Holdings’ Lisboa Palace (2,000). Although non-gaming attractions were always going to be a big component of the resorts currently under construction on Cotai, previously, when gaming was looking so strong, the non-gaming elements might have been conceived in some instances as loss leaders that drive traffic to the casino. Going forward, however, it looks like Macau’s casino operators, like their Las Vegas counterparts, are going to look at non-gaming departments increasingly as potential standalone profit centers. China’s Generation 2 could prove a game changer, enabling Macau to follow the lead of the Las Vegas Strip in diversifying its revenue streams. The best-case scenario for operators’ bottom lines would be for Macau to retain a strong gaming sector centered on the high-margin mass market, while also cultivating meaningful non-gaming revenues. After all, even with sizeable contributions from non-gaming departments, total casino resort revenue on the Las Vegas Strip only reached US$16.3 billion in the 2014 financial year, barely 37% of Macau’s gaming revenue last year. The concern then would be that Generation 2 might also end up debunking the notion of the insatiable Chinese appetite to gamble, just as younger generations in the US have turned away from gambling. Critical mass will be key. It is the sheer volume of the dining and entertainment on offer in Las Vegas that makes it a go-to destination for gourmands and clubgoers in the US, and supports its position as a leading MICE destination.