Macau Casinos Look To Diversify As VIP Gambling Continues To Fall

A nationwide crackdown on corruption in mainland China has left many of Macau’s once-bustling casinos empty. Once a popular destination for China’s high-rolling officials, the special administrative region of Macau, located off the southern coast of mainland China, is rethinking its strategy and plans to rely more on entertainment and fine dining and less on gambling for revenue.

Leading the pack is Galaxy Entertainment Group, which announced it is opening two casino resorts -- emphasis on "resort" -- in Macau in spite of an industrywide downward trend in revenues over the past 11 months, according to data from the Gaming Inspection and Coordination Bureau of Macau. According to the Hong Kong Economic Journal, Galaxy’s chief financial officer, Robert Charles Drake, says the company isn’t concerned about the gambling lull because it plans to lure visitors with more activities and entertainment than just casinos. Galaxy’s newest endeavors, the Galaxy Macau Phase Two and Broadway Macau, will feature the densely populated city’s largest kids park, a 3,000-seat theater, a “skytop” river ride as well as gambling tables.

Similarly, Melco Crown Entertainment Ltd. plans to diversify in entertainment and retail. “We have really focused our attention on things beyond gaming to reach out for a new group of people and tap into new revenue streams,” JD Clayton, the president of Melco’s new Macau project called Studio City resort, said, according to Reuters. The Studio City resort, which will open in the second half of this year, will feature a giant Ferris wheel and a Batman movie-themed ride.

Hoteliers are also hoping to cater to tourists interested in Macau’s expanding culinary options. A food tourism trend is popular among Chinese traveling internationally. With the number of Michelin-starred restaurants doubling since 2009, Macau believes new dining options will help entice visitors.

Beijing’s crackdown on corruption and extravagant spending by state officials may have eliminated a significant portion of Macau’s clientele. Luckily, China is also home to an increasingly wealthy middle class that likes to spend on travel, shopping and fine dining.

However, investing in other attractions hasn’t been a sure bet in the past. Cirque du Soleil’s "Zaia" stage production at Sands China closed just three and a half years into a 10-year contract because of low demand.