From its Portuguese colonial days to the gaming powerhouse that it is today, Macau has indeed come a long way. And Cotai is Macau’s marvel. This was the topic of conversation at a recent British Business Association of Macau lunch, with guest speaker Keith Buckley, Executive Project Director for Hsin Chong Engineering (Macau) Ltd.
Keith, a 40-year engineer and construction veteran has been at the sharp end of Macau’s hotel casino developments for the past 13 years. All his projects have been for the Venetian group; the first was the building of Sands Macao which opened in May 2004. This property took Macau’s casinos from tired and tacky to the glitzy gold glamour of ‘integrated resorts’. The operators haven’t looked back since, vying with each other to create the next hottest place in town. In 2002, Macau had 14 casinos. Now it has 37.
The most recent project opening in Keith’s portfolio of achievements was in September this year – The Parisian with its 3,000 luxury guest rooms and half size replica of the Eiffel Tower.
He gave his audience, many who were long-term residents, a helpful reminder of Macau’s gaming history: how gambling was legalized in 1847, the first casino monopoly franchise granted in 1937, and in 1962 when the government granted STDM (Stanley Ho) the monopoly rights over all forms of gambling for 25 years. This license was extended in 1986 for 15 years but then expired in 2001 and the gaming concessions were then tendered out to international competition.
In the early days, Cotai’s fate hung in the balance. When the Macao Airport opened in 1995, a World Trade Center was initially pitched by Stanley Ho and his partners, to include 10 hotels, an exhibition center and theme park. Failing to win support at the time, the scheme was shelved.
Then in 1999, before the transfer of Macau back to China, the Portuguese administration proposed reclamation of Cotai in order to turn it into a residential and commercial area for 200,000 inhabitants. In 2001, the Infrastructure and Development Office (GDI) requested that the above plans be adapted to accommodate hotels and residential units. The revised proposal was shown to the potential casino concessionaires entering Macau to explain the vision for the future of the city. The rest, as they say, is history.
In 2002, the government signed concession contracts with three gaming companies: Wynn Resort (Macau) SA., Galaxy Casino SA. and SJM SA. From these, three sub-concessions were spun off: Venetian Macau SA (from Galaxy) – 2002; MGM Grand Paradise SA (from SJM) – 2005; and Melco Crown (Macau) SA (from Wynn) – 2006.
Keith showed fascinating ‘before and after’ photos of how Cotai went from being a narrow causeway crossing a heavily silted expanse of water from Taipa to Coloane, to the Cotai we know today, which at almost six square kilometers is 20 percent of the entire area of Macau’s 30.4 km2.
He summarized the list of major integrated resorts that have opened in Cotai: starting with the Waldo, now Broadway, in April 2006, then the Venetian in August 2007. The Four Seasons Hotel Resort and City of Dreams followed in quick succession in 2008 and 2009 respectively. A short lull during the global financial crisis, then a pick up again in May 2011 with the opening of Galaxy Phase 1, then Sands Cotai Central in April 2012. Galaxy Phase 2 and Studio City opened in 2015. Then this year, Wynn Palace and The Parisian.
Quite a few of the lunch attendees had lived through these developments over the past ten years and agreed that they now couldn’t imagine Cotai looking any different than it is today!
Keith shared some interesting facts and figures about Cotai. There are now 17 hotels offering over 21,000 rooms, three multipurpose arenas, six theatres, 1,300 retail outlets, more than 300 restaurants and millions of square feet of meeting, convention and exhibition space. Some US$33 billion was invested in
Macau by the six concession holders between 2002-2014.
Comparisons between Macau and the other great world gaming centre, Las Vegas are always fascinating. In Vegas, gaming revenue in 2006 was US$6.7 billion, and nine years later, in 2015, it was US$6.4 billion. They had 42.3 million visitors in 2015, accommodated in 149,200 hotel and motel rooms. Their average stay was 3.4 days. In Macau, gaming revenue in 2006 was US$7.2 billion, rising to US$44 billion in 2014, then dipping down to US$29 billion in 2015. We had 31.5 million visitors in 2015, with 32,249 hotel rooms, and an average length of stay of only 1.4 nights.
So what does the future hold for Macau? Ahh, that we had a crystal ball! The remaining Cotai gaming projects due to open will be MGM and The Thirteen in 2017, Grand Lisboa Palace in 2018, followed shortly after by Tower 5 at City of Dreams and Galaxy’s Phases 3 and 4. And then what? Will it be a case of ‘build it, and they will come’ or have we seen a saturation point of gamers to Macau who are now being lured to casinos in other Asian destinations?
It’s getting really critical for some of the operators that the long-awaited light rail and new Cotai ferry terminal are opened; I’m thinking in particular of Wynn Palace, (and soon MGM and the Grand Lisboa Palace), as their off-strip location is not proving conducive to getting visitors to them.
Then there’s the uncertain future for the concessionaires as the end of their licenses looms ahead. Macau’s current casino gaming licenses are scheduled to expire in 2020, or 2022, depending on the contract signed between the government and the operator. For some that’s only four years away. There’s a question mark over how the administration plans to handle the renewal process. Will it simply renew the licenses of the existing casino gaming operators and keep everything unchanged? Or will it open a new round of public bidding for casino gaming concessions that would allow new entrants to participate?
Macau, its people and its investors have achieved incredible feats in development over the past 14 years. I really wonder what’s in store for the next 14 years.