The real challenge for integrated resorts in Macau

Since reopening after Covid, Macau has been striving to redefine its global role. Historically a world centre for gambling, the city is now trying to become a comprehensive integrated destination. However, despite massive investment and visitor numbers close to pre-pandemic levels, the road ahead remains fraught with obstacles. 

The legacy of gaming: still dominant

In Macau, the gaming economy has never been so clearly at the centre of tourism activity. While the six casino operators have invested more than $13.6 billion in non-gaming projects planned under their concessions until 2032, gaming revenues remain the majority. Despite visitor growth approaching 39.4 million, gross gaming revenue remains about 16% below 2019 levels, due to the lack of a strong comeback by the high-rolling VIPs of a few years ago. 

‘High-spending VIP customers have largely disappeared and been replaced by mass-market visitors who spend more moderately,’ explains Andy Choy, a senior executive in the gaming industry in Macau.

A gambling addiction that Vegas has overcome

In Las Vegas, gambling is no longer the cornerstone of the tourism economy. Today, it is just one part of a diverse mix that includes shows, restaurants and entertainment. But in Macau, this diversification is still a long way off: resorts still depend on high-end gaming revenue for more than 70% of their income, despite some progress in non-gaming revenue.

‘I think the Macau market is currently driven by probably less than 1,000 players. The amounts they bet are staggering. This week, I saw a man at MGM betting a million [Hong Kong dollars, or €110,000] per hand while moving from table to table in the high-limit area,‘ explains Anthony Lawrance, managing director of Intelligence Macau. ’Basically, no one believes in the mass market anymore, and why would they when these types of players exist?’

Kenneth Feng, an executive at MGM China, adds another dimension to this challenge: the wealth gap. The difference in per capita GDP between China and the United States means that the profile of potential visitors for non-gaming leisure activities is more limited, which naturally limits the appeal of non-casino attractions.

One of the key problems identified is the difficulty in attracting visitors who are not simply there to gamble. In a region where cities such as Tokyo, Bangkok and Shanghai already offer phenomenal cultural and shopping experiences, Macau does not yet offer enough compelling non-gaming reasons to broaden its audience. 

‘Tokyo, Bangkok, Europe, Australia, Hong Kong. If you don’t gamble, what’s the point? Shopping? In Shanghai, you can find everything you can find in Dallas. It’s not the China of 30 years ago,’ explains Vitaly Umansky, senior analyst at Seaport Research.

Operators are multiplying attractions: Melco has reinvented shows and entertainment, Studio City Phase 2 offers a water park and a Dolby cinema, while Galaxy Macau has opened a convention centre and a 15,000-seat arena. But despite these efforts, no major attraction has yet become a universal ‘must-see’ capable of justifying a tourist trip on its own. Choy points out that Las Vegas continues to surprise with its ability to innovate in the experiences it offers, from professional sports to spectacular shows. 

‘It’s hard to ignore the global geopolitical uncertainty,’ says Andy Choy. ‘With several military conflicts ongoing and the trade war between China and the United States, it’s natural for discretionary consumer spending to decline.’

Too few hotels

Another major contrast with Las Vegas lies in the accommodation on offer. While Vegas has some 150,000 hotel rooms, Macau has fewer than 50,000, which are often fully booked at weekends. 

This directly limits the capacity to accommodate more non-gaming visitors, including business travellers, conference groups and families – segments that, alongside gaming, now account for a large share of global tourism revenue. To compete in the convention and exhibition sector, Macau needs to effectively double its hotel capacity, according to Umansky. 

The government has not made this task easy. Some operators say they would build more rooms if hotel investments could be counted towards non-gaming investment commitments, something the local authority is reluctant to do. 

To compensate for this limited capacity, a strategic bridge to Hengqin, a special economic zone on the Chinese mainland, is taking shape. When visitors cross the canal from Cotai, they can access hotels, shopping centres and attractions without physically being in Macau. 

Maria Helena de Senna Fernandes, director of the Tourism Office, says that hotels in Hengqin can effectively expand the supply of rooms available to visitors to Macau. For some, such as Matthew Ossolinsky, an investment fund manager, this strategy works like a series of buckets filled with water: when Macau overflows, Hengqin captures the surplus, particularly for accommodation and family attractions. 

However, Hengqin’s proximity raises a question: non-gaming tourist spending could well be captured outside Macau itself, limiting the impact on the city’s economy. 

Governance and vision: the absence of a conductor

At the heart of the persistent obstacles lies an institutional question: who is steering Macau’s transformation into an integrated tourist destination? For Umansky, the answer is simple: there is currently no entity equivalent to the Las Vegas Convention and Visitors Authority capable of coordinating strategy, marketing and development around a common vision. Without a clear framework and unified leadership, projects often remain disjointed, driven by operators’ own visions rather than a coherent overall strategy. 

‘Some investments are made by the government itself [such as] infrastructure,’ explains Fernandes, a civil servant who has headed the MGTO since 2012. ‘The government would not transfer all its responsibilities to IRs. It doesn’t work that way.’

Transforming Macau into a kind of Asian Las Vegas is not impossible, but it requires a rethink of how the city approaches its appeal. The balance between gaming and non-gaming needs to be rethought, the hotel offering expanded, and above all, a coordinated vision adopted to convince travellers from around the world that they have much more to gain here than just a casino bet.