Inside Asian Gaming

inside asian gaming November 2016 30 “Junkets contacted by Inside Asian Gaming wouldn’t comment on whether they interpret the Crown raids as a signal to keep business in Macau, where it’s much easier for mainland authorities to track players and the local government gets its 39% tax levy.” bridge from Hong Kong and the light rail visible on the horizon. For now, analysts differ on whether the city’s tourismmenu is half- full or half-empty. Sanford Bernstein estimates Macau’s non-gaming revenue will expand at a compound annual rate of 12% through 2020, and a recent report focuses on the luxury shopping segment. SHOP TO STOP THE DROP “While the dollar revenue and profit generated by the casino operators through retail (largely rental income) is modest, a critical mass of differentiated retail offerings acts as a draw for visitors to come to Macau and consequently spend on accommodations, F&B, and, most critically, in the casino,” Bernstein’s intercontinental team, led by Senior Analysts Vitaly Umansky in Hong Kong and Mario Ortelli in the UK, writes. “The Macau gaming market is rightly embracing retail as an important amenity and magnet for (mostly Chinese) customers seeking a more diversified travel destination. To drive visitation in the long run, a casino floor will not be enough.” The report acknowledges Macau has not been immune from regional decline in luxury sales but suggests it can outgrow Hong Kong as the sector recovers. Bernstein notes Macau has more luxury stores than Las Vegas and sees opportunities to grow the “soft luxury” segment of clothing and accessories rather than watches and jewelry – Macau may have more Cartier than McDonald’s outlets. Luxury retailers get superior margins in Macau, according to Bernstein, luring them to the market. The report sees Macau’s growing visitation from beyond Guangdong and rising overnight stays boosting luxury retail. In its report titled SAR Attractions, CLSA looks at making China’s two Special Administrative Regions, Hong Kong and Macau, great again. After loosened travel rules led to a 2003-13 “Golden Decade” of extraordinary growth, over the past two years mainland arrivals to Macau have stagnated. CLSA Regional Head of Consumer and Gaming Research Aaron Fischer and colleagues suggest that the government go beyond declaring its goal of creating a “world center of tourism and leisure” and begin providing a map to get there, citing research showing mainlanders substituting domestic travel for Macau visits. The report says Macau needs more attractions beyond gaming and retail, more hotel rooms, more cooperation among casino operators to build the destination with the government – with walkways between Cotai Feature In Focus