In about two years, the six gaming concessions in Macau will begin to expire—some in 2020 and some in 2022. Since the concessions cannot be renewed, as such, and entirely new concessions would need to be awarded, the International Monetary Fund (IMF) suggests that this would be an ideal time for Macau to try make a push for more non-gaming operations among those casino operators who want to seek a new concession.
The goal, according to the IMF, would be to promote non-gaming tourism. Macau has already set out on a mission to include tourism activities beyond gambling, so the idea already has a strong foundation. The IMF stated in a report this past Monday, “With all six gaming concessions expiring in 2020 and 2022, the authorities have the opportunity to further advance their growth strategy and should craft the new regulations with stronger incentives for operators to expand non-VIP tourism.”
The organization added, “To accommodate the higher number of tourists under a mass-market and non-gaming model, infrastructure plans should advance in order to ease supply-side bottlenecks. Some of these areas are expanded entertainment, convention and exhibition options, hotels and retail, including via integrated resorts and family-oriented facilities.”
The Macau economy is swayed by what happens in mainland China. Economic and financial policy changes in the mainland could impact Macau’s success and the IMF points out that a number of factors—including banking sector exposures, the trade war between the U.S. and China and more restrictive global financial conditions—could hinder Macau’s future growth if the city doesn’t diversify its tourist portfolio.
The IMF continued, “With most tourists coming from the [Chinese] mainland, any policy that undermines their spending power abroad would negatively affect growth.” If China were to legalize gambling on the mainland, or there is weaker growth in China’s economy, Macau could suffer major setbacks in the progress it has seen in the past several years.
“Gaming and tourism revenue returned to strong growth in 2017 and early 2018, after negative growth over 2014 to 2016 following developments in mainland China that reduced external demand from high-spending visitors (i.e., VIP). Growth moderated in the second half of 2018, including from weaker investment and reduced VIP gaming linked to [the] mainland’s de-leveraging effort and U.S.-China trade tensions,” the IMF concluded.
