Tempered by falling revenue and the exodus of Chinese high-rollers, Macau’s gambling industry continues to evolve.
Most casino operators in Macau have started adapting to the new norm of lower VIP numbers and slumping gaming revenues in the past two years by diversifying their businesses to other segments in order to keep up with the ever changing casino markets.
Take Macau casino operator Galaxy Entertainment Group Ltd. for example. Galaxy recently announced that it is redefining the “VIP” label in its business vocabulary as the casino operator turns its focus into luring the big shoppers to prop up its revenues.
Geoff Freeman sees the trend of diversification of Macau casinos to continue even as the former Portuguese enclave’s market has already stabilized.
He pointed out that Macau casinos’ decision to shift their focus from the VIP segment to the mass market and non-gaming aspect is a sign that the industry is just at its infancy and that the prevailing gaming revenue slump is just part of the market’s growing pains.
“This market is still in the early stages of its evolution. I know that the companies here are in here for the long haul and they are optimistic about the long term right now,” Freeman told CalvinAyre.com. “The first quarter [revenue] is a strong first quarter, and other companies feel good about that. You have billions of dollars being spent on non-gaming activities here, and that’s going to grow in the years ahead.”
Freeman recalled that there were skyrocketing demands for high-stakes gaming from customers when Macau was just starting. He said that casino operators then doesn’t worry that things will go wrong during the first few years of the market since they are sure that customers will always come to their casinos at any given time.
The situation, according to Freeman, however, changed when the Chinese economy cooled years after the financial crisis hit US and other European countries. He said that the anti-corruption crackdown that Chinese President Xi Jingping launched had put an additional burden on the shoulders of Macau casino operators.
“Today’s market tests your skills. You’ve got to work on your market, you’ve got to work on your product. It’s a much more competitive market than it has ever been before,” he said.
Taking in the positive, Freeman pointed out that these events in China has pushed Macau casinos to explore revenue growth in the non-gaming segment of their operations. Unlike in Las Vegas, the potential of Macau casinos’ non-gaming segments has not yet been fully tapped.
“What works for Vegas may not be exactly what works here but I know that the operators are developing this amenities,” he said. “They are optimistic about the future there is increasing demand. You see a good number of families looking for different opportunities that they can do to enjoy themselves.”
He also expressed optimism that Macau will be able to retain its title as the world’s casino capital amid its ailing economy.
“Again the companies that are spending $4 or $5 billion to build a property, they are not here for the first quarter, second quarter one year, two years. These properties are built for decades of success and I think they are well positioned for that,” he said.