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Macau Rides High on New Round of Casino Construction Macau Rides High on New Round of Casino Construction
(5 months later)
MACAU — This city on the southeast coast of China already has its own version of Venice, complete with a Grand Canal and a Rialto Bridge. MACAU — This city on the southeast coast of China already has its own version of Venice, complete with a Grand Canal and a Rialto Bridge.
Soon, it will get a taste of France, with an Eiffel Tower and a giant resort modeled on the Palace of Versailles, as part of a building boom that has brought dozens of cranes to a stretch of reclaimed land here.Soon, it will get a taste of France, with an Eiffel Tower and a giant resort modeled on the Palace of Versailles, as part of a building boom that has brought dozens of cranes to a stretch of reclaimed land here.
Macau has grown explosively over the last decade, and another burst of expansion is in full swing as some of the world’s biggest casino operators step up their bet on China’s love for gambling.Macau has grown explosively over the last decade, and another burst of expansion is in full swing as some of the world’s biggest casino operators step up their bet on China’s love for gambling.
Last month, executives of the Macau casino company Sociedade de Jogos de Macau, or SJM, in gold-colored helmets and wielding spades of the same color, broke ground on construction of the Versailles-like Lisboa Palace. The $3.9 billion complex is expected to open in 2017. It will be equipped with 700 gambling tables and feature three hotels — including a Palazzo Versace hotel and a hotel designed by Karl Lagerfeld, the chief designer for the Chanel and Fendi fashion houses.Last month, executives of the Macau casino company Sociedade de Jogos de Macau, or SJM, in gold-colored helmets and wielding spades of the same color, broke ground on construction of the Versailles-like Lisboa Palace. The $3.9 billion complex is expected to open in 2017. It will be equipped with 700 gambling tables and feature three hotels — including a Palazzo Versace hotel and a hotel designed by Karl Lagerfeld, the chief designer for the Chanel and Fendi fashion houses.
A former Portuguese colony that was handed back to Chinese control in 1999, Macau now dwarfs Las Vegas as a gambling hub. And it epitomizes the rising spending power of Chinese and their economy’s evolution away from heavy-duty manufacturing toward more consumption-oriented growth.A former Portuguese colony that was handed back to Chinese control in 1999, Macau now dwarfs Las Vegas as a gambling hub. And it epitomizes the rising spending power of Chinese and their economy’s evolution away from heavy-duty manufacturing toward more consumption-oriented growth.
A four-decade monopoly held by a local gambling magnate, Stanley Ho, ended in 2002, opening the floodgates to a building frenzy that resulted in a tripling of casinos, to 35, in a decade. Many are situated on the Cotai Strip, land that was once a stretch of water between the islands of Coloane and Taipa.A four-decade monopoly held by a local gambling magnate, Stanley Ho, ended in 2002, opening the floodgates to a building frenzy that resulted in a tripling of casinos, to 35, in a decade. Many are situated on the Cotai Strip, land that was once a stretch of water between the islands of Coloane and Taipa.
Gambling revenue has soared to nearly 361 billion Macau patacas, or about $46 billion, last year, from 22.2 billion patacas in 2002. By comparison, the Las Vegas Strip generated about $6.5 billion last year, and has experienced little growth over that same period of time.Gambling revenue has soared to nearly 361 billion Macau patacas, or about $46 billion, last year, from 22.2 billion patacas in 2002. By comparison, the Las Vegas Strip generated about $6.5 billion last year, and has experienced little growth over that same period of time.
“It’s astounding what’s happened in the past 10 years,” said Edward M. Tracy, chief executive of Sands China, the Hong Kong-listed subsidiary of the Las Vegas Sands Corporation. “We sit next to the biggest market in the world,” he said. “It’s one billion more people than the U.S.”“It’s astounding what’s happened in the past 10 years,” said Edward M. Tracy, chief executive of Sands China, the Hong Kong-listed subsidiary of the Las Vegas Sands Corporation. “We sit next to the biggest market in the world,” he said. “It’s one billion more people than the U.S.”
Las Vegas Sands, the company behind the giant Venetian hotel and casino resort and other sites in Macau, is adding a complex called the Parisian scheduled to open next year. A smaller version of the Eiffel Tower will feature an observation deck and a 200-seat restaurant.Las Vegas Sands, the company behind the giant Venetian hotel and casino resort and other sites in Macau, is adding a complex called the Parisian scheduled to open next year. A smaller version of the Eiffel Tower will feature an observation deck and a 200-seat restaurant.
The Galaxy, a big resort that is part of Galaxy Entertainment Group, a Hong Kong company, opened less than three years ago. Ritz-Carlton and JW Marriott hotels are being added to the site.The Galaxy, a big resort that is part of Galaxy Entertainment Group, a Hong Kong company, opened less than three years ago. Ritz-Carlton and JW Marriott hotels are being added to the site.
Wynn Resorts, another American casino operator, is planning a 1,700-room casino-and-hotel complex that is expected to open in 2016. Stephen A. Wynn, the company’s founder and chief executive, aims to make this “the photo op and the conversation piece of Asia.”Wynn Resorts, another American casino operator, is planning a 1,700-room casino-and-hotel complex that is expected to open in 2016. Stephen A. Wynn, the company’s founder and chief executive, aims to make this “the photo op and the conversation piece of Asia.”
“I can’t think of anything more exciting,” than to be active in Macau, Mr. Wynn said in a recent phone interview from Las Vegas. “There is nothing like it.”“I can’t think of anything more exciting,” than to be active in Macau, Mr. Wynn said in a recent phone interview from Las Vegas. “There is nothing like it.”
Driving all this activity are people like Mr. Liu, a chain-smoking 57-year-old paint factory owner from Foshan, about 75 miles north of Macau, who was placing bets of as much as 20,000 Hong Kong dollars, or about $2,600, at the baccarat tables in a V.I.P. room at the Venetian this month. (Bets in Macau are typically made in Hong Kong dollars rather than Macau patacas.)Driving all this activity are people like Mr. Liu, a chain-smoking 57-year-old paint factory owner from Foshan, about 75 miles north of Macau, who was placing bets of as much as 20,000 Hong Kong dollars, or about $2,600, at the baccarat tables in a V.I.P. room at the Venetian this month. (Bets in Macau are typically made in Hong Kong dollars rather than Macau patacas.)
“I lost 100,000 yesterday,” said Mr. Liu, who declined to give his first name for privacy reasons. “I didn’t even go back to my hotel room last night and now I’m winning it all back. I have more cash in my hotel safe. I just had a grandson and we’re here to celebrate. Money is not a problem.”“I lost 100,000 yesterday,” said Mr. Liu, who declined to give his first name for privacy reasons. “I didn’t even go back to my hotel room last night and now I’m winning it all back. I have more cash in my hotel safe. I just had a grandson and we’re here to celebrate. Money is not a problem.”
Nearly 20 million people, or one in five Chinese who ventured outside mainland China last year, came to Macau to gamble, shop and sightsee.Nearly 20 million people, or one in five Chinese who ventured outside mainland China last year, came to Macau to gamble, shop and sightsee.
They form the vast majority of visitors to Macau, and executives and analysts are confident that rising affluence and improved transportation connections — including a bridge linking Macau and Hong Kong in 2016 — will drive growth for some time.They form the vast majority of visitors to Macau, and executives and analysts are confident that rising affluence and improved transportation connections — including a bridge linking Macau and Hong Kong in 2016 — will drive growth for some time.
Analysts at Nomura, for example, forecast in a recent report that gambling revenue could nearly double to $80 billion by 2018. This helps explain why operators like Wynn, Sands and SJM are prepared to plow billions of dollars into more expansion despite the fact that taxes on gambling revenue in Macau are far above those in Nevada.Analysts at Nomura, for example, forecast in a recent report that gambling revenue could nearly double to $80 billion by 2018. This helps explain why operators like Wynn, Sands and SJM are prepared to plow billions of dollars into more expansion despite the fact that taxes on gambling revenue in Macau are far above those in Nevada.
The forest of cranes on the Cotai Strip is also testimony to the casino operators’ faith that Beijing, despite a recent clampdown on corruption and ostentatious spending, is content to let gambling thrive in Macau, which is a special administrative region of China with its own regulations and where casinolike gambling is allowed, unlike on the mainland.The forest of cranes on the Cotai Strip is also testimony to the casino operators’ faith that Beijing, despite a recent clampdown on corruption and ostentatious spending, is content to let gambling thrive in Macau, which is a special administrative region of China with its own regulations and where casinolike gambling is allowed, unlike on the mainland.
So far, neither the crackdown nor a cooling of China’s once-sizzling economy has dampened Macau’s bustling malls and gambling halls. Hotels, many of which charge several hundred dollars a night, have occupancy rates of more than 90 percent. And statistics released on March 3 showed that gambling revenue in February had jumped 40 percent from a year earlier, to a record $4.8 billion.So far, neither the crackdown nor a cooling of China’s once-sizzling economy has dampened Macau’s bustling malls and gambling halls. Hotels, many of which charge several hundred dollars a night, have occupancy rates of more than 90 percent. And statistics released on March 3 showed that gambling revenue in February had jumped 40 percent from a year earlier, to a record $4.8 billion.
To cope with this growth, Hengqin Island, next to Macau, has been designated as a site for residential housing and hotels. No gambling will be allowed on Hengqin, which is under the mainland’s jurisdiction.To cope with this growth, Hengqin Island, next to Macau, has been designated as a site for residential housing and hotels. No gambling will be allowed on Hengqin, which is under the mainland’s jurisdiction.
For now, analysts and executives say, labor poses one of the biggest constraints. Wages have risen rapidly, and tens of thousands of additional employees will be needed to staff the resorts under construction, putting pressure on the authorities to allow in more immigrants.For now, analysts and executives say, labor poses one of the biggest constraints. Wages have risen rapidly, and tens of thousands of additional employees will be needed to staff the resorts under construction, putting pressure on the authorities to allow in more immigrants.
“Macau is the China consumption story in one place,” said Aaron Park, an American and a former banker who works for Paradise Entertainment, which operates a casino in Macau. “In a few years, Macau will become an epicenter for the world’s biggest brands.”“Macau is the China consumption story in one place,” said Aaron Park, an American and a former banker who works for Paradise Entertainment, which operates a casino in Macau. “In a few years, Macau will become an epicenter for the world’s biggest brands.”
Amid the clink of chips and the warbles of slot machines, the atmosphere in the gleaming gambling halls is intense. Gamblers are here to win, not to have fun. They drink tea and coffee, not alcohol. It is not uncommon to see people eating noodles brought to them at the gambling tables. Many bet thousands of dollars on a hand of cards.Amid the clink of chips and the warbles of slot machines, the atmosphere in the gleaming gambling halls is intense. Gamblers are here to win, not to have fun. They drink tea and coffee, not alcohol. It is not uncommon to see people eating noodles brought to them at the gambling tables. Many bet thousands of dollars on a hand of cards.
But the casino operators are also increasingly trying to lure travelers with families and children — people like Zhao Yi, a 36-year-old electronics salesman from nearby Guangzhou, who visited with his wife and son recently. For them, a three-day stay was not about gambling, but about good food and celebrating their wedding anniversary.But the casino operators are also increasingly trying to lure travelers with families and children — people like Zhao Yi, a 36-year-old electronics salesman from nearby Guangzhou, who visited with his wife and son recently. For them, a three-day stay was not about gambling, but about good food and celebrating their wedding anniversary.
“We thought of Las Vegas, but Macau is just so close, and maybe better anyway, so we came here,” he said. “We had canard au sang yesterday at a good restaurant,” a traditional French duck dish, “and it was pretty special.”“We thought of Las Vegas, but Macau is just so close, and maybe better anyway, so we came here,” he said. “We had canard au sang yesterday at a good restaurant,” a traditional French duck dish, “and it was pretty special.”
The new sites include luxury shopping arcades, spas, swimming pools and ballrooms. The Venetian has a 15,000-seat arena, where the Rolling Stones performed this month.The new sites include luxury shopping arcades, spas, swimming pools and ballrooms. The Venetian has a 15,000-seat arena, where the Rolling Stones performed this month.
SJM’s planned Lisboa Palace complex strip will feature a wedding pavilion and a theater, and link to a neighboring family theme park. The Galaxy has cinemas and an enormous “fortune diamond” that emerges from a fountain every half-hour. At the Wynn, a dragon periodically rises from the floor of a domed lobby, to the delight of photo-snapping onlookers.SJM’s planned Lisboa Palace complex strip will feature a wedding pavilion and a theater, and link to a neighboring family theme park. The Galaxy has cinemas and an enormous “fortune diamond” that emerges from a fountain every half-hour. At the Wynn, a dragon periodically rises from the floor of a domed lobby, to the delight of photo-snapping onlookers.
“Gambling won’t go out of fashion. It will just become part of a wider offering,” said Ian M. Coughlan, president at Wynn Macau. “We’ve not really tapped all the demand that exists — we’re far from it. It’s an iceberg situation.”“Gambling won’t go out of fashion. It will just become part of a wider offering,” said Ian M. Coughlan, president at Wynn Macau. “We’ve not really tapped all the demand that exists — we’re far from it. It’s an iceberg situation.”