Could Macau’s downtown go the way of Vegas and become ‘second tier’ casino hub?

  • Traditional gaming area threatened by development of the Cotai Strip
  • Four out of six Macau casino operators have opened properties in Cotai

The traditional gaming zone in Macau’s downtown peninsula could become a second-tier casino hub, according to a report in GGR Asia.

Macau, China. The region's casino industry has posted a strong performance in the final quarter of 2016
Macau could go the way of Vegas, and have a Strip and downtown separation of casino hubs, according to an analyst. Picture: Thinkstock.

The report cites the comments of Andrew Klebanow, a senior partner in Global Market Advisors LLC, a US-based consultancy firm, who says that there are parallels between what is happening in Macau and the way in which the traditional gaming district in Las Vegas was overshadowed by the development of the Las Vegas strip.

His comments reflect the shifting in the centre of gravity of Macau’s gambling activities to Cotai and what has become known as the ‘Cotai Strip’, where a number of high-end casino resorts have been built, with more planned.

Four out of six of Macau’s casino operators have opened casinos in Cotai, drawn by the competitive advantages offered in the region, including amenities such as shopping and entertainment.

Market share

The bulk of new hotel rooms that have become available in recent months have been in Cotai, and according to Klebanow, the peninsula casinos are likely to continue to lose market share to the more attractive venues along the Cotai strip.

His prediction is supported by the fact that both of the Macau casino operators that have yet to open Cotai facilities, SJM Holdings Ltd and MGM China Holdings Ltd, have posted poor revenue returns in the second half of 2017, despite the fact that casino gross gaming revenue in Macau rose significantly in the three months to the end of June.

Klebanow also indicated that if it was to survive, the Macau peninsular would have to re-invent itself as a second-tier gambling hub, as occurred in Las Vegas, in order to halt the loss of market share to Cotai and prevent the flight of downtown owners.

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