Non-gaming elements: the future of the local gaming industry

2013-12-30

From：Macau Daily Times

Several national and local political figures, including Chinese President Xi Jinping, have clearly stated that industry diversification is crucial for the sustainable development of Macau. Professor Zeng Zhong Lu from the Macau Polytechnic Institute predicts that the city’s gambling and recreation industry will follow the path of its Las Vegas counterpart and increase the proportion of non-gaming elements. However, he admitted that it is impossible for non-gambling elements to surpass gambling elements in the near future. Nevertheless, he thinks that although visitors will initially be attracted to the novelty of gaming, they will eventually seek other entertainment outside casinos because of changes in consumption preferences.
“The gambling industry in Las Vegas has moved further towards featuring more non-gambling elements after the recent financial crisis. For example, the casinos in several new resorts in Las Vegas are smaller compared to those in the past. Moreover, the resorts were either luxurious or had a specific theme. The new ones, however, aren’t that luxurious any more and don’t really have any themes. Rather, they are modern and look like commercial buildings. This indicates that people are less interested in gambling in the city. They are more attracted by non-gambling entertainment such as nightclubs, which have the greatest potential for growth because the younger generation likes to go to nightclubs instead of gambling in the casinos,” said Prof. Zeng.
He added that although Las Vegas is still some distance ahead of Macau, we are actually moving closer to the famous US city. “Macau is in fact moving towards this (developing non-gambling industries). If you look at the past, you can only find a few non-gambling components. But there has been a greater development in recent years,” the scholar said. He pointed out that, apart from the retail and catering businesses inside the casino resorts, street retail outlets and caterers are also growing rapidly, indicating that Macau has already achieved some level of development in the non-gaming sector. “What we have to do now is further promote the growth in this sector… We have to study other countries’ experiences and see what our visitors’ preferences are. Then we can examine the condition of Macau’s gambling industry to see how we can better cater to visitor demand,” Prof. Zeng claimed. He also added that more than half the visitors to Macau don’t gamble. Instead, their main objective is to shop. Hence, he believes that Macau’s retail industry has huge potential.
Furthermore, the professor thinks that the Macau Peninsula and the Islands will gradually move in different directions, resulting in them sharing different pools of visitors. “I think (the resorts in) the Cotai area will probably focus on providing entertainment. In other words, all facilities – including gambling, shopping and catering – will be located inside the resorts. There will be a division of labor between Cotai and the Macau Peninsula. It is because many shopping and catering facilities are outside the casino resorts (on the Macau Peninsula). Therefore, both sides will have different characteristics. On the Peninsula, there is more focus on cultural heritage… It will [thus] focus on recreation activities and entertainment outside casinos, while Cotai will focus more on casinos… Both of them will have their own specialties and neither will replace the other. As a result, visitors who want to gamble will stay in Cotai, while tourists looking for entertainment will go to the Peninsula,” Prof. Zeng predicts. He also pointed out that compared to casino resorts on the Macau Peninsula, those in Cotai are less able to bring wealth to the community because money is mostly spent within the resorts.
The professor concluded with a vague estimation that the size of the non-gaming sector would increase to 30 or 40 percent of the whole gambling and recreation industry within 5 to 8 years. Since the global trend clearly indicates that the non-gambling part will eventually become the dominant component in the industry, the scholar thinks that it is only a matter of time before Macau catches up with this trend.

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