Mainlanders hold the key to rebound

Macao's over-reliance on big-spending mainlanders is a problem, which may make the city's recovery from the recent slump a long process as there are no signs current regulations on extravagant spending will be eased, experts warned.

"Such over-dependence, coupled with uncertainty over future, puts Macao on a bumpy ride," said Zeng Zhonglu, professor of the Gaming Teaching and Research Center at the Macao Polytechnic Institute.

In June, Macao saw a 5.7-percent rise in visitor arrivals from the Chinese mainland, following a 1.7-percent fall over the first quarter and a 4-percent slide for the whole 2015.

Mainlanders constitute more than 60 percent of total tourist arrivals and generate over 80 percent of gambling revenues.

But no one is certain if the rise in the number of visitors in June signifies a trend that could potentially sustain all the casino resorts, including the new ones and those in the pipeline.

Tokyo-based bank Nomura and Swiss lender UBS warned of a supply glut, joining a chorus of concerns voiced by several research houses that attempts to bring in more gamblers with new facilities may end up ratcheting up the already elevated market competition.

Macao nowadays is mired in a situation similar to that of Las Vegas in 2007. Back then, excess supply hit the Vegas market amid sluggish demand, said Nomura in a report.

New ventures may not necessarily reverse the slump in revenues. The second phase of Galaxy Macao, the mega casino that opened in May 2015, reported a 5-percent on-year growth in its main floor business for the second quarter of 2016. That pales in comparison with the 11-percent surge in overnight stays of mainland tourists in Macao. The two figures signify that an increase in the number of visitors may have been offset by their diminished spending power.

Also, the specter of stringent regulations continues to haunt casino operators, with Macao's government announcing the growth limit for gambling tables this spring and becoming rather cautious about casino license renewal.

US casino magnate Steve Wynn's newly opened Wynn Palace received approval for 150 gaming tables, just over a third of what the company initially applied for. And come 2020, some of the city's six casino operators would leave no stone unturned to secure renewal for their concessions.

(China Daily 09/20/2016 page15)