Macau casinos should shift focus to foreign tourists to survive, expert says

Macau gaming professor and former lawmaker Davis Fong has called on casinos in the Chinese enclave to switch focus to foreign tourists. According to the expert, operators can still flourish should they adapt their models to attract players from other places than mainland China.

The gambling academic said that, given policy changes in the market, local casinos should start targeting customers from other points of origin, such as Hong Kong and Southeast Asia. Moreover, he said that, before the partial opening of the casino market, Macau saw many tourists from Japan, according to Macau Daily Times.

Fong discussed the Macau gambling industry on the sidelines of an event held on Wednesday. The expert said he believed that expanding the sources of clients, as far as the law permits, should be a long-term goal casinos in the enclave would have to consider. 

The region is currently facing the challenge of adapting to China’s crackdown on cross-border gambling, as well as a new gambling review. “With these changes, our gaming services will depend on exportation, which means sourcing clients from different regions,” the academic said.

Regarding junkets, which have been targeted by authorities as of late, Fong pointed out that these establishments used to have multifaceted operations. Local media sees this as a hint that junkets could continue to operate in Macau, should they react swiftly to market changes.

“VIP rooms existed before the handover of Macau from Portugal back to China in 1999,” he added. “I remember during that decade there were many clients from Southeast Asia, including Japanese, Malaysian, Thai and Taiwanese.”

Mainland China authorities, where gambling is illegal, see junkets as responsible for helping to siphon billions of yuan overseas, a risk to a country that has always had strict controls on capital outflows. This has led to an ongoing crackdown effort.

“Traditionally some casinos and VIP rooms have targeted clients from mainland China to promote their business, but this is inconsistent with the legal system,” Fong said. “But I don’t agree that we are at the phase of remodeling our structure.”

When questioned whether Macau would be affected by a lack of tourist arrivals from other source markets should borders remain closed amid Covid-related restrictions, Fong said “the pandemic will end someday.”

But as long as Covid-19 keeps international tourism off the plan, he believes that, in the short term, Macau should look to Hong Kong, which has “always been” an important client source. 

“Before the handover, 7 million people came to Macau from Hong Kong each year, but with our marketing more focused on mainland China, that has dropped to 5 million,” he added. “Now we have a chance to use our old marketing, so when the border with Hong Kong opens, we move forward step by step, absorbing more Hong Kong clients.”

The border with Hong Kong has been reported as likely to open on December 19. Targeting the Hong Kong market would help compensate for the lost Southeast Asian and worldwide arrivals.

“This is for the short term. For the middle term, we hope with vaccination that next year we can have international tourism,” Fong added. In the middle term, Southeast Asian tourists would also return to Macau.

The academic also discussed perspectives for the upcoming year. Fong remains confident that, should visitor numbers grow, so will do gross gaming revenue, as he believes there is a correlation between both factors.

“Our tourist numbers are the main factor in driving the GGR,” he said, while stating he was confident GGR will reach at least $12.5 billion in the coming year. “After all, mainland tourists have waited for external travel for quite some time already,” he added.