MACAU—It took Macau just two years to eclipse the Las Vegas Strip as the world’s biggest gambling hub after the Chinese territory opened up its casino market. Trying to catch up with Vegas as an entertainment capital is slower going.
Michelin-star chefs, circus shows and concerts by Bruno Mars and Celine Dion are among the star attractions Macau has promoted in an effort to lure tourists who don’t necessarily want to play the tables. The city is trying to reduce its reliance on gambling revenue in response to pressure from Beijing, which has cracked down on corruption and outflows of currency through Macau.
Fourteen years after a competitive casino market opened in Macau, officials here have a modest goal: to pull at least 9% of revenue from non-gambling sources by 2020, up from 7% in 2016. It took Las Vegas just a decade from the introduction of the first mega-resorts for non-gambling revenue to top 50%. Gambling now makes up 34% of revenue on the Strip, where more-liberal casino licensing has fueled fierce competition and forced operators to develop other attractions to distinguish themselves.
Hurting Macau’s efforts to sell a new image is the area’s attraction for high rollers, a shortage of land to house tourists and develop better attractions such as theme parks, and a failure to tap into what Chinese tourists want, according to interviews with officials, casino operators and industry experts.
“In people’s minds, Macau is still a gaming center,” said Wilfred Wong, president of the China unit of billionaire casino mogul Sheldon Adelson’s Las Vegas Sands .
A Portuguese territory until 1999, Macau was for decades monopolized by a local casino operator. The enclave boomed after officials gave licenses to other casino operators, including Sands China Ltd. , Wynn Macau Ltd. and MGM China Holdings Ltd. Driven by high rollers amid China’s breakneck economic growth, the casinos prospered, handling more than $45 billion in wagers combined at their annual peak in 2013.
Chinese President Xi Jinping’s crackdown on money laundering and capital flight in Macau led to falling revenue for more than two years until mid-2016. Since then, revenue has risen for 23 straight months, and casino bosses have been told to focus on non-gambling attractions.
In entertainment terms, Macau lags behind Vegas for options. In June, visitors to the Nevada city could choose from more than 120 events, including performance residencies by Jennifer Lopez and Boyz II Men, and Cirque du Soleil productions, according to the official Las Vegas visitors guide. Macau’s tourism board listed less than half that number, and included acts such as Korean pop group GOT7 and Celine Dion’s two-night stand at Macau’s Venetian casino, at which some seats were empty.
Macau casino bosses may be misreading their core audience, said Kevin Clayton, chief marketing officer at Hong Kong-listed casino operator Galaxy Entertainment Group Ltd. Much of the entertainment is geared toward the tastes of Westerners, he said, rather than Chinese tourists who made up about 70% of visitors to Macau in the first quarter of 2018.
While Vegas thrived by fully opening its casino market, Macau has six licensed operators and is hampered by a lack of land for development. Hotels in the 12-square-mile territory are often almost full on weekends and the main casino strip sits atop reclaimed land.
Some existing operators have little to show for efforts to broaden their appeal. Wynn Macau’s non-casino revenue—including food and beverage, retail and hotel rooms—was 6.7% of total revenue in 2017, up from 5.6% in 2008, and MGM China has struggled, with non-gambling revenue slipping to 2% last year from 2.5% in 2010. MGM China didn’t respond to requests for comment. Sands has done better, with the share of non-gambling revenue growing to 16% in 2017 from 12.6% in 2008.
Sands is investing $1.1 billion in Macau projects in the next couple of years, including themed casino resort The Londoner Macao, due to open in 2020. This follows its opening of The Parisian in September 2016, targeting non-gambling tourists with a half-size replica of the Eiffel Tower and roaming mime artists. Destination casinos are popular with tourists who want the experience of traveling elsewhere, and the Sands group’s hotel occupancy in the first quarter rose 12 percentage points from the prior year, to a record 94%.
MGM in February opened a resort featuring Asia’s first dynamic theater that can be reconfigured quickly into any of more than 10 different layouts. In June, China’s Melco Resorts & Entertainment Ltd. opened its Zaha Hadid-designed Morpheus hotel. Its City of Dreams property already features “The House of Dancing Water,” a water-based acrobatic production that has attracted four million visitors since 2010.
“A gaming table is a homogenous product,” said Melco Chief Executive Lawrence Ho. “What we’re really competing on is guest experiences and the amenities and attractions that we can offer.”
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