Macau is the most densely populated city in the world, lying west of Hong Kong across the Pearl River Delta. Since the Portuguese returned Macau to Chinese rule in 1999, the city has become increasingly reliant on gambling to generate revenue, and has made a reputation for itself as the Las Vegas of the Orient.
However, revenue from gambling in Macau has dropped roughly 20% in the past year, and in a city where the gambling sector accounts for over 80% of the total economy, this is a very big problem. Pundits and officials alike are realizing that if Macau is going to maintain its flow of tourists, it will have to dramatically reshape its image.
“The dominance of one industry can lead the city to prosperity, but it also can lead to its demise,” notes Li Gang, director of the Central People’s Government Liaison Office in Macau.
“There’s an opportunity for Macau to attract a new breed of customer, one which is looking for a more holistic experience,” said Aaron Fischer, a gambling analyst at the brokerage firm CLSA.
Incidentally, many Macau casinos will be up for renewal in 2016, and one of the main criteria in their assessment will be their progress in creating non gambling attractions. Currently, non gambling attractions account for an estimated 10% of revenue in Macau, compared to roughly 60% in Las Vegas.
Factors contributing to the demise of the Macau’s gambling industry include an allay in China’s economic development, heavily policed anticorruption measures throughout the city, and a growing mistrust in junkets – middlemen who work as middlemen for their respective casinos, organizing their travel accommodations and tending to their gambling credit.
Pundits believe that a generational gap is also a contributing factor. Older men tend to play lots of baccarat and spend most all of their time gambling, while the younger generation expresses interest in more diverse activities.
One way or another, Macau needs to change to save its economy. Either they’re going to have to turn a blind eye to corruption and improve their casinos while retaining the appeal of decadence, or change their imagen drastically.