Chris Wieners, Managing Director, Velvix, spent the better part of a decade living in Macau. Here he lays out what might be expected of the destination in the near future.
Having lived in Macau during its 'heyday' between the years of 2007 to 2017, I often have those living and working in other Western jurisdictions asking me my thoughts on Macau’s past successes and whether or not I feel that the Special Administrative Region (SAR) will ever return to its former glory as the world’s gaming capital. With continuing news around Macau’s zero-Covid policy, the extinguishing of a large portion of the VIP business, license uncertainties and more, it’s easy to see why so many have left the region. But does Macau have long-term potential to reclaim its seat at the table?
In short, yes. And here’s why.
Macau has long struggled with an identity crisis, even in the good times. While gaming operations have been the lifeblood of the city, pressure has been on for nearly two decades by Chinese officials to reduce the SAR's reliance on gaming. Physical infrastructure has mirrored those requests – massive integrated resorts like Cotai, the piece of reclaimed land started and anchored by Sheldon Adelson’s Venetian Macau resort. Luxury shopping malls, movie theaters, celebrity restaurants – Macau has it all. However, unlike Las Vegas, Macau’s heart and soul, its core customer, did not evolve.
While the model of the customer base changed, it remained focused on gaming. Shifts between mass, premium mass and VIP can be traced over the last decade, but the core customer has continually remained focused on core activity. With the cash flow to build mega resorts, Macau’s operators continue to follow government requests, even at a time when Covid and economic uncertainty plague Greater China.
Will these investments pay off? Let’s look at what needs to happen for Macau to succeed and build itself back as a sustainable market for the future.
First and foremost, Macau must adjust its zero-Covid policy. While the odds of this happening in the short term are minimal, there is light at the end of the tunnel. Macau’s tourism arm, the Macao Government Tourism Office (MGTO), has recently confirmed that limited Chinese tour groups will be allowed to return to the city en masse.
Assuming no further lockdowns (a case of Covid was discovered as I write this article, with effects on mass testing or lockdowns to be seen) then it is possible for the city to recover in the short to medium term with the reintroduction of travel from the Chinese mainland. One can expect major campaigns, funded and promoted by the MGTO, to help ensure that Macau’s promotion as an ‘international’ tourist destination within China keeps it top of mind with potential tourists.
Secondly, and most importantly, Macau must diversify. In this, I am not referring to its focus on any one industry (although that needs to happen for the country’s long-term survival at large). However, here I refer to its ability to diversify and change its image in the eyes of its target market – Chinese visitors. Ask nearly anyone in China about Macau and you will be hard pressed to find someone who doesn’t associate it with gambling. Unfortunately, the name is also often associated with far less desirable activities, many of which, while far removed from the city, have left legacies that are difficult to erase from memories.
For Macau to succeed, it needs to focus on more than its heritage, although that’s important, too. Although it does not often like the comparison, many still note Macau as the Las Vegas of the 50s and 60s. A focus on gambling, a very specific target audience, and the need to change in order to thrive. While the audiences themselves may be very different, the need for Macau to re-launch its customer-facing brand mirrors that of efforts by Las Vegas.
Luckily, the city has no lack of resources to do this. Glittering resorts offer all of the physical infrastructure offered by the likes of Singapore and Las Vegas.
So why don’t the customers come? For one, customer service in Macau significantly lacks quality. The recent Covid talent drain has further hurt the city, with many of the SARs most seasoned talent leaving in search of greener pastures. Marketing also plays a significant role, with the SAR primarily relying on the marketing efforts of select mega resort operators, all of whom are competing for market share. Places such as Las Vegas and Singapore already have significant market mixes when it comes to tourism, brought on by a wide variety of activities, events, entertainment and more.
Concerts, festivals and sporting events are top of mind and bring a different type of customer, one who helps diversify the city’s image and brings legitimacy to other segments, such as conventions and exhibitions. Macau can take notes from the pages of these destinations, promoting other facets of entertainment and creating a draw of new customer bases from China and around the world.
Additionally, Macau must support its SMEs. Having a business in the country, I can say that Macau has come through for some, with subsidies and loans to help companies survive the Covid-driven economic woes. However, much more needs to be done, and not only financially.
Macau’s culture is incredibly unique and anyone who has spent time there will undoubtedly confirm some of the world’s best cuisine resides there, both in and out of casino resorts. Yet local festivals that celebrate this are few and far between, or poorly promoted to the international community. There are exceptions to this when it comes to culture
– the yearly International Fireworks Festival sees competitors from around the world – with PR to suit.
Unfortunately, this is one of the few truly ‘international’ events. By developing and owning more of these types of activities, the SAR can work to attract those from overseas and neighboring countries, further diversifying its tourism sector and increasing the brand’s equity in the global tourism market.
Will Macau recover? Absolutely, but not without significant changes to its current model. While some of the causes of the current environment may be out of the control of operators, there are many opportunities to rally support in the local community and work to further develop and prepare for the future. The people of Macau are depending on it.