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Three years after the arrest of Suncity chairman Alvin Chau dealt a significant blow to Macau's junket industry, the Asian gaming landscape has undergone dramatic changes. The combined impact of Covid-19, Beijing’s clampdown on overseas gambling and illegal money transfers, and a push to diversify Macau’s economy away from casinos has reshaped the region's gaming sector.
Once accounting for over 70% of Macau's gaming revenue, VIP play generated $29.8 billion in 2013. By 2019, that figure had halved to $14.2 billion. This year, Morgan Stanley Asia managing director Praveen Choudhary projects VIP play revenue to reach just $3.3 billion. Overall, Choudhary estimates Macau’s total gaming revenue will hit $28.4 billion in 2024—22% below the $36.2 billion recorded in 2019 and significantly lower than the all-time high of $45.1 billion in 2013.
Casino operators across Asia are adapting to these shifts, a process that began a decade ago when China’s regulatory intentions became clear. However, much remains to be done.
Contrasting Trends Emerge
Mary Mendoza, managing director of Platinum Consulting Group, highlights two seemingly contradictory trends in Macau’s evolving market. “You have a lot of mass market tourists, but they’re spending less. They take pictures, cruise for free stuff, and then go back to hotels in Zhuhai and Hengqin,” she says, referencing the nearby mainland China islands.
Yet, on the gaming floors, “You don’t see many low limit tables under HK$1,000 (US$128),” Mendoza notes. Operators appear to be moving lower-level players to electronic table games while reserving live tables for rated players or those with potential to become rated.
This shift aligns with what Vitaly Umansky, senior analyst at Seaport Research Partners, describes as the “premiumisation of Macau and its customer base.”
From Functional to Opulent
An example of this trend is Sands China’s transformation of Sands Cotai Central, which opened in 2012, into The Londoner Macao. Situated near the Venetian and Parisian properties, the revamped resort has gained traction with visitors.
“Renovations converted Londoner from a bland property that no one really wanted to go to,” Umansky explains. “There wasn’t a lot of spend going on at that property.” In contrast, Paul Heretakis, principal at Westar Architects, observes that The Londoner has now become a must-visit destination. “If you’re only in Macau for a short period of time, and you might only visit half or a third of the properties, [Londoner] has become one of the ones you would visit now.”
The conversion also extended to accommodations, upgrading the Holiday Inn and Sheraton hotels into Londoner and Londoner Court, featuring larger rooms and more suites. The total room count was reduced from the initial plan of 6,000 to fewer than 4,500, reflecting a strategy to prioritize quality over quantity.
Kevin Clayton, a former executive at Galaxy Entertainment and Sands China, believes this shift aligns with the rising demands of premium customers. “Trading up on product quality, sometimes at the expense of volume, appears to be a common competitive strategy across the leading integrated resort operators in Macau over the past three to four years,” Clayton explains.
High-Spending Guests
Andrew Klebanow, principal at Klebanow Consulting, highlights the importance of attracting higher-value visitors. “Mass tourism should not be confused with value-oriented tourism,” he says. The upgraded suite offerings at The Londoner, for example, enable Sands to command higher rates and draw guests who are not price-sensitive. “Those new visitors will also spend more on retail, dining, and gaming,” Klebanow adds.
Mass market gaming spending has reflected this trend. Through October 2024, mass gaming revenue was 12% ahead of 2019, driven by higher per capita spending. Non-gaming spending per visitor also rose by 29% compared to pre-pandemic levels, though year-on-year figures have recently declined, impacting retail in particular.
Non-Gaming Aspirations
Macau’s non-gaming revenue has reached approximately 25% of visitor spending, a notable increase from pre-pandemic levels. However, it remains far behind Las Vegas, where non-gaming accounts for two-thirds of total revenue. Combined 2024 EBITDA for Macau’s casino operators is projected at $8.1 billion, 18% below 2019, according to JP Morgan’s DS Kim.
“The government may want to turn Macau into Disneyland, but that’s not where revenues and profits lie,” says Sudhir Kalè, founder and CEO of GamePlan Consultants. “In my lifetime, Macau will always be a gambling-centric destination and all operators know that.”
Paul Steelman, CEO of Steelman Partners, believes Macau still has a long way to go in building a robust non-gaming ecosystem. “Las Vegas has 220,000 theater, sports, and entertainment seats. Sports, entertainment, and conventions fill Las Vegas hotel rooms consistently,” Steelman says. He adds that Macau’s casinos will need to reimagine their spaces, integrating non-gaming attractions alongside gaming areas.
Embracing Younger Audiences
A growing number of younger Asian visitors seek experiences similar to those offered in Las Vegas, Steelman notes. “They are less likely to be all-night gamblers who eat a quick bowl of noodles and continue playing,” he says. Instead, these visitors demand diverse activities and Instagram-worthy moments.
For example, Steelman highlights Mohegan Gaming’s Inspire Aurora in Incheon, which features a “Digital Street” reminiscent of Las Vegas’ Fremont Street Experience. The installation attracts 20,000 visitors daily and generates significant social media buzz.
Enhancing Customer Experience
Mendoza believes a more strategic approach to customer incentives is essential. “Gaming incentives such as free play or match play are yielding diminishing returns,” she says, suggesting alternatives like tournaments, lucky draws, and promotions combining gaming with non-gaming attractions.
Clayton agrees, adding that exclusive retail product launches or themed property installations can create unique experiences that resonate on social media. Events like food festivals or wine tastings further enhance the appeal of Macau’s integrated resorts.
Adapting for the Future
The shift away from VIP junket play has prompted operators to rethink their marketing strategies. Mendoza suggests rebalancing promotional efforts to engage mass market and premium mass segments, while Klebanow points out that marketing expenses remain lower than the commissions once paid to junket promoters.
Looking ahead, Heretakis emphasizes the need for Macau’s casinos to adapt to a more competitive global market. “Macau was a very special place for a period of time where it was just seeing incredible amounts of money,” he says. “It’s a more competitive market environment now, more like most environments around the world.”
By fLEXI tEAM
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