Twenty years after Macau returned to Chinese government rule, a change that put Macau on the map as the world’s biggest gambling hub, casinos are facing huge and ongoing obstacles to their future growth.
Due to its heavy reliance on casino revenue, which is in turn heavily reliant on tourism, Macau has been especially hard hit by the novel coronavirus pandemic. It’s no surprise then that in the last year, that the special administrative region has had the worst financial showing in decades.
The effects of 2020
The global Covid-19 pandemic has hit hard economically every industry worldwide. Macau and the global casino industries were particularly devastated, with closures, lack of tourism and events, and decreasing revenue month after month.
Macau pre-2020 was a bustling entertainment hub, built to rival any of the large entertainment venues around the world. Once China retreated to the mainland to focus on combating the virus and travel bans began, Macau became a ghost town. Massive hotels that once were filled to the brim lay empty and half-finished super casinos were never completed as the investors fled home.
For all intents and purposes, it was just like the deserted mining towns of the Old West. Once the gold, silver, and money ran dry, there was no reason for anyone else to stay, and those who did had to find a way to survive.
The November boost
Visitation to the tiny island has continued to be the ongoing challenge for Macau. November 2020, however, did see a small boost that helped to rally hopes for the future prospect of the special administrative region. Macau’s economy saw a small spike due to the Macau Grand Prix race that accounted for 28,000 visitor arrivals, which was the highest single-day total in the previous year.
Analysts are hardly optimistic, however, for future boosts of this kind, saying that the lack of tourism will continue to hinder Macau’s economy until it eases visa restrictions and cancels the mandatory 14-day quarantine period for visitors from mainland China and Taiwan.
Diversification needed
During the last year of unprecedented events, economic decline, and sweeping changes worldwide, Macau chief executive, Ho Iat Seng has criticized the country’s “excessive dependence” upon the gambling industry. Any region that is dependent upon a single industry is always at risk of having it fail and wiping out the economy overnight.
The problem persists, but what does a nation do when they have a massive infrastructure built with nobody to fill it?
Macau’s answer is to find a different group of people to fill it… that is, once the travel restrictions are lifted. Macau officials are looking to put on a new tech conference to try and rival the Las Vegas Consumer Electronics Show (CES), the world’s largest tech conference.
Macau is only now starting to pull itself out of its decline, but it may be some time before we see the results.
Into the New Year
Even moving into 2021 with optimistic outlooks for the new year, gambling revenue in Macau in January has dropped 63.7% from a year earlier. The world’s biggest casino hub still continues to struggle to attract visitors from its key market of mainland China because of a rise in COVID-19 cases across the border.
The January figures for casino revenue were just recently released by the government, showing a massive decline from the previous year, with only 8 billion patacas ($1.00 billion) in gross revenue.
The ongoing Covid-19 pandemic, complex immigration and visa laws, and lack of tourism are the obvious culprits here.
Stay at home, play online
With stay-at-home orders issued worldwide, and it no longer being safe to go outside or gather in public businesses that rely on foot traffic and bodies through the door needed to either rethink their business model or fail.
The casino industry at-large, however, has done an impressive job of pivoting and revamping its business model. Most gamblers have moved online and this may have a long-lasting effect.
With the change in various gambling laws, many new online casinos have opened up and are starting to flourish. Players are beginning to find out that the glamour and glitz of traditional casinos, while attractive, aren’t the only way to play. Online casinos are becoming an ever-increasing option for many countries around the world.
Hope on the horizon
Although the current outlook for Macau looks pretty bleak, there are signs that improvement might be just around the corner.
Market analysis for December 2020 shows that the growth rate for Macau’s economy is starting to show signs of picking up, however, with a growth rate of almost 4%. Despite the pandemic and harsh economic conditions, there is a slight and gradual improvement that may give Macau’s casino operators a bit of hope going forward into the new year.
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