Inside Asian Gaming

INSIDE ASIAN GAMING | April 2012 10 in little over a year. The changes wrought on society have been dramatic as well. Today, about 15% of Macau’s working population is employed in a casino, more than 22,000 of them as croupiers. Full-time casino workers earn the equivalent in US dollars of $2,090 per month on average, considerably more than workers outside the industry, who bring home a median of between $1,275 and $1,500. But then, before the gaming boom, they would have been fortunate to make $150 a week. Unemployment, which stood at 6.3% in 2002, was 2.1% last year, the fourth-lowest rate in the world (only tiny, oil-rich Qatar and the export-driven states of Thailand and Singapore were lower). Macau’s total working-age population of 347,000 or so can no longer supply the economy’s demand for able, qualified bodies in hospitality, construction and services. The number of non-resident workers has nearly tripled over the last decade, and authorities estimate that 30,000 more imported workers will be needed this year alone to sustain a labour force that could grow by as much as 10% in the next 10-12 months. But restrictions on foreign workers are a political fact of life, and there is widespread opposition to relaxing them. It’s a volatile issue. Those who through lack of education or job skills have missed out on the general prosperity have made their discontent known on more than once occasion. Twenty-five police were injured in street protests on May Day 2006. Four demonstrators were arrested. May Day 2007 was worse. A bystander was killed by a stray police bullet. Ten were arrested, 21 police were injured. Government has been treading something of a high wire on this issue ever since, suspended between the desire to encourage investment in Macau’s progress as a leisure destination and the need to temper it while the social infrastructure slowly catches up. In May 2008, then-Chief Executive Edmund Ho announced a short-lived moratorium on new gaming projects and licenses. More recently, a decision to cap the number of new table games at 3% a year has served only to confuse everyone, especially with the government committed to continued large-scale resort development on Cotai. The rapid pace of development has sparked competitive flare-ups among the casinos as well. At the same time, operators have shown an increasing willingness to work together when confronted with crises that threaten to undermine the health of the industry—like the VIP commission rate war of 2007-08. The standard commission on rolling chip volume in the city’s VIP rooms had been steadily climbing since the end of the monopoly era, when it stood at a manageable 0.7%. By the middle of the decade it was well above 1%. Then in December 2007, Melco Crown’s newly opened Crown Macau (now Altira) threw the market into turmoil by announcing a deal to pay Hong Kong-listed junket promoter Amax a record 1.35%. The effect onmargins was so acute that withinmonths the government weighed in with a proposal to roll back the rate to 1.25% and freeze it there by law. By that time, though, under the auspices of the venerable Stanley Ho, the operators had begun meeting regularly to discuss matters of mutual concern. Out of those meetings came Macau’s first casino industry trade association, the Chamber of Macau Casino Gaming Concessionaires and Sub-Concessionaires. When in August 2009 the government finally drafted a regulation to allow for the imposition of a cap, the casinos had already agreed to enforce the recommended 1.25% on their own. There are other challenges. The city remains largely a day-trip market. Non- gambling spend continues to lag far behind spending at the tables and slots. Average length of stay remains about where it’s always been, never moving much beyond a day. A shortage of hotel rooms keeps rates high and discourages casual visitors who tend to spend more and stay longer. Developing the MICE trade is another key. On the plus side, development of Cotai is proceeding apace, the focus there on more expansive resort offerings—more entertainment, dining and shopping for the masses—with several thousand new rooms expected to come on line as more development applications are approved over the next few years. Meanwhile, a number of high-profile road and rail projects are moving ahead that will speed access to the city from Hong Kong and extend its reach even deeper into Mainland China. “Then in December 2007, Melco Crown’s newly opened Crown Macau (now Altira) threw the market into turmoil by announcing a deal to pay Hong Kong-listed junket promoter Amax a record 1.35% [rolling chip commission]. The effect on margins was so acute that within months the office of the chief executive weighed in with a proposal to roll back the rate to 1.25% and freeze it there by law.” Cover Story