Macau: The Future Entertainment Capital of the World?
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Case Details:
Case Code : ECON024
Case Length : 19 Pages
Period : 1999-2007
Pub. Date : 2007
Teaching Note :Not Available
Organization : --
Industry : Miscellaneous
Countries : Macau SAR, China
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"The fact is, as we stand today, Macao is going to be a bigger market than Las Vegas. And by the end of the decade it could be twice the size of Las Vegas."1
- Harry Curtis, a gambling analyst at JP Morgan, in July, 2007
"Macau is potentially one of the best markets to ever open up."'
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- Matthew Jacob, an analyst with Majestic Research in New York, in August, 2006
"The prospect of an oversupply [in Macau] is a major concern...Going forward, we intend to provide more gaming facilities, not hotel rooms."3
- Vanessa Fan, Managing Director, Emperor Group, Hong Kong, in February, 2006
Introduction
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In 2006, Macau, a Special Administrative Region (SAR)4 of the People's Republic of China (PRC), with its 27 casinos, replaced Las Vegas5 as the biggest center of gambling in the world (Refer Exhibit I for a map of Macau). Macau's casinos had revenues of 55.9 billion Macanese Patacas6 (US$ 7 billion), an increase of 22% (year-on-year).7 According to Rob Hart, a Hong Kong-based gaming and property market strategist for Morgan Stanley, Macau's gaming revenues were expected to reach US$ 10 billion in 2007.8 Macau's gaming industry developed in the 18th century, when the Portuguese administered the island. Since then the gaming industry has grown manifold, with the patronage of visitors from China, a country where all forms of gambling are banned.
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When Macau became a SAR of the PRC on December 20, 1999, the Chinese government implemented the "one country, two systems"9 policy, which ensured that Macau's gaming industry remained legal. Soon after the SAR government was formed, it announced that it would reduce Macau's dependence on the gaming industry.
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However, since Macau's economy was heavily dependent on gaming revenues and there were few alternatives for the economy's growth, the government decided to develop a master plan that would help Macau become a tourism and gaming hub in Asia.
The Beijing government too supported the master plan. In 2002, Macau's gaming industry was opened up. The opening up of the gaming industry attracted several foreign casino operators, including some based in Las Vegas, into Macau.
These foreign operators announced grand plans to build integrated casino-resorts with hotels, convention centers, and shopping malls. |
Macau: The Future Entertainment Capital of the World?
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