Macau seems to be playing with fire. The incident where the riot police were called in to calm down 120 angry Chinese tourists on a wind-swept beach who had protested angrily to tour guides over an itinerary too packed with shopping could lead to a serious problem. For Macau.

Two dozen police with batons and riot shields faced off with the tourists from China’s Hubei province for nearly five hours Tuesday night who were protesting that tour guides had taken them to too many shops and pressured them into buying things.

The argument erupted after the tour guides took the group to the beach, and the tourists, complaining of cold, could not reboard their four locked coaches.

Police arrived on the scene and called for reinforcements, and the stand-off ended when the tourists were persuaded to go to a hotel.

A small incident.

But what if it should inspire the Chinese government to look into whether it is a good thing to allow Chinese people to charge into Macau mainly for the benefit of overseas casino owners. This is the only place in gambling-mad China where casinos are legal, and the annual visitor arrivals have doubled since 2003, when the Chinese government began to loosen restrictions on individual travel.

Some 22 million people visited the former Portuguese-run enclave last year.

U.S. gaming firms including Las Vegas Sands and Wynn Resorts have rushed in to set up giant casinos, with Las Vegas-style shopping arcades and entertainment complexes attached. And, the intent, is to take a large amount of money from the tourists from China.

Now the Macao tourism bureau will report the dispute between mainland tourists and Macao tour guides and police to the National Tourism Administration. A delegation led by vice director of Macao’s tourism bureau will submit the investigation report during a meeting with central officials in Beijing.

What if the Chinese authorities think that enough is enough and reintroduce border restrictions. It would cut down on totally profitless gambling — profitless as far as China is concerned — and leave a lot of American and Australian entrepreneurs crying in their soup.
Source: Reuters

This is a little complicated because of the geography. Hengqin is an island in Zhuhai, a prefecture-level city in the Guangdong province of China. That is an unassailable fact. However, it is very close to Macao and, in a sense, could be thought of as an extension to Macao because there is a connecting bridge.

Hengqin is the largest island among the 146 islands of Zhuhai. It is roughly three times the size of Macao. It has all the attributes needed for a resort — broad bays, sandy beaches and beautiful scenery.

Hengqin was formerly made up of two islands, Da Hengqin and Xiao Hengqin but these were recently connected as a result of land reclamation. The reclaimed island is 96 square km which already has one residential development.

Since the land reclamation and development, there has been a growing opinion in Macao that the island should be leased to Macao, where land is very limited and there is little room for further development.

By September 1, 2005, plans were announced that the government of Guangdong province will allow tax exemptions and adopt flexible immigration control in Hengqin to promote investment from Hong Kong and Macao. This would make all the people connected with gambling in Macao very pleased.

Since late 2005, Las Vegas Sands has openly discussed its multi-billion-dollar plans to develop parts of Hengqin Island into a convention and resort destination. The project would include four million sq ft of hotel space. Plus the supporting convention facilities, retail shops, vacation homes, and golf, tennis and yachting amenities.

Think of it as US$12 billion project and you are about right.

An analyst’s report stated that the US$9 billion-US$12 billion project has secured approval. This according to Jefferies & Co analyst Lawrence Klatzkin who cited Sands’ management.

He may have been a bit premature in making this announcement.

All that has happened is that the government of the city of Zhuhai, which oversees Hengqin, has set up a group to help ‘advance’ the plan. Which is a bit different from full approval.

The company did not say if the central government — which typically gets involved in multi-billion-dollar deals involving multinationals — had even got involved.

So the company issued a statement which said: ‘While the formation of a Project Coordination Committee is a positive step forward, the project remains subject to governmental approvals customary for projects of this scale.’

So it has not happened yet. But it does seem imminent.
Source: Business Times Asia

Hotel-casinos are popping up one after another in the former Portugese colony to welcome the recent surge of Chinese tourists, as mainland travel restrictions are relaxed and visitors flock to Macau’s Las Vegas style casino, which was opened by Las Vegas Sands Corp in 2004. The first hotel-casino complex, the US$1.2 billion Wynn Macau, opened its doors in September, shortly followed by Galaxy Group’s Starwood Hotel.
Source: Bloomberg and AFP (Taipei Times)

The Wynn Macau hotel-casino opened last night, becoming the “Macau’s first full-scale Las Vegas-style casino resort”, according to this article in the South China Morning Post.
A confident Steve Wynn had the following to say:

“The Sands was an interim step … It’s performed well financially, but in no way does it represent the future of the city … I think hotels on this scale or taken to a larger scale will be the future of the city.”

No doubt. He also got in a few jabs at his competitor on both sides of the Pacific, Sheldon Adelson, who opened a smaller casino, the Sands, last year:

“We are different from the other guys. We don’t build down-and-dirty quickies.”

Plus a little boasting:

“We get more yield per table than anybody else, including the Venetian [another Adelson-run casino, which is also building a Macau resort], whether it’s slot machines or tables … We make more money than the Venetian all the time. So it’s not so much the dog in the fight as the fight in the dog.”

After which he had the following to say:

“It doesn’t do much good to categorise or put down the other guy,” he said. “That won’t make any money for anybody and it doesn’t accomplish much.”

Mr Ho last month complained about the “vicious competition” in Macau’s casino market, saying one-third of his VIP gaming halls faced bankruptcy, putting thousands of jobs at risk.

But Mr Adelson retorted that Mr Ho should “get out of the kitchen if he can’t stand the heat”.

Mr Ho said he hoped Wynn Resorts would help check the competition from Sands. “This new opponent is very strong. Hopefully this new opponent can compete with [Sands]. I am very happy.”

Source: South China Morning Post

This from the Financial Times on the intensifying competition in the once-monopolistic casino market in number 2 SAR Macau:

Sheldon Adelson, the Las Vegas casino mogul, on Monday warned Stanley Ho and other gaming operators in Macao that competition in the world’s second largest casino market has only just begun and would intensify.

“If you can’t stand the heat, get out of the kitchen,” said Mr Adelson, chairman and chief executive of Las Vegas Sands.

Visiting the former Portuguese enclave to mark the topping off of his company’s $2.3bn Venetian Macao resort, Mr Adelson was responding to Mr Ho’s complaints earlier this month that the Las Vegas Sands’ first operation there – the Sands Macao – was squeezing his casinos. …
Las Vegas Sands, the first foreign investor to enter Macao’s gaming industry in 2004, has transformed the market with the Sands Macao, a world-class casino that appeals to the mass market. The 700-table Venetian Macao, a Las Vegas-style resort, is due to open next summer.

The market share of Sociedade de Jogos de Macau, Mr Ho’s gaming flagship targeted at VIPs, has since fallen from about 85 per cent to 70 per cent.

The article refers to Stanley Ho’s (right, 85 years young) complaints of a month ago, which he renewed yesterday, saying that newcomer [American] casino-hotel operators like Adelson and Steve Wynn are receiving favorable treatment. To wit:

A grim Mr Ho said: “I can’t take it lying down. Why do you so favour the Americans? It’s unfair.” He said some US stakeholders in the gaming industry had broken their promise of “peaceful competition” while disregarding Macau’s future.

“At that time they said there would be peaceful competition. We invest in Macau all the money we earn, but you guys [Americans] just take it away.”

The tycoon said some US stakeholders had tried to break his helicopter monopoly - important for bringing in high rollers - but he would not give it up.

He also complained about losing casino staff: “They never trained any staff but took away ours.”

He said the cutthroat competition would hurt the long-term interests of Macau, and even Beijing.

“In the long run, they may take away my business and affect Macau. They may send people to the Legislative Assembly and take control of Macau. It may not be good for Beijing either.”

Sources: Financial Times, South China Morning Post

Other links:

Casino battle heats up in Macao

Wynn Optimistic About Macau Casino

A Strip, Yes, But Not The Strip, Wynn Says
Image from www.macaucasinoworld.com, forbes.com