On December 16, the Macau government and the city’s six gaming concessionaires officially signed new gaming concession contracts to keep operations going for another 10 years.
Chief Executive Ho Iat Seng presided over the ceremony as representatives of each of the bidders signed the new agreement: MGM Grand Paradise Ltd., Galaxy Casino Co. Ltd., Venetian Macau Ltd.; Melco Resorts (Macau) Ltd/, Wynn Resorts (Macau) Ltd. and SJM Resorts Ltd.
As part of the new deal, the operators pledged to invest MOP118.8 billion (US$14.8 billion) into the industry, most of it (US$13.5 billion) earmarked for non-gaming amenities expected to attract more foreign tourists. The rest will go to what Macau Business described as “gaming investments.”
Non-gaming projects will boost the convention and exhibition business and also include entertainment and sporting events, the development of amusement parks and focus on culture and art.
“The aim is to enhance Macau’s international image and its attractiveness to tourists, by hosting high-standard events and branded projects,” authorities said.
Allan Zeman, non-executive director and chairman of Wynn Macau Ltd., acknowledged the new emphasis on non-gaming in comments to CNBC, in the weeks before the signing ceremony. As an example, he cited Las Vegas, where 60 percent of total casino revenue comes from non-gaming.
“I think Macau wants to really follow something like that going forward,” said Zeman. “Every operator has had to come up with some new visions of non-gaming, and these are all part of the contract negotiations,” he added.
Zeman expressed hopes that the local and central governments will ease their strict Covid-19 restrictions—a hope later borne out by news that Beijing is finally entering a new, less aggressive phase of dealing with viral outbreaks.
“We need to see how the restrictions at the border between Macau and China, and Hong Kong and Macau are relaxed,” Zeman added.
Song Wai Kit, president of the city’s Responsible Gaming Association, agreed, telling Inside Asian Gaming that letting those who test positive to quarantine at home is a positive sign. But he argued for the removal of barriers to travel within the greater China region.
“The most important thing for Macau now is to resume normal immigration with Hong Kong,” Song said. “We also have to pay attention to the resumption of electronic visas from the mainland and there is the issue of capital control, but on the whole Macau is moving in a good direction.
“I don’t think there will be much change in (gross gaming revenue) this month, mainly because the Macau community is still adjusting to the new policy and everyone is wary of the virus,” he added. “I have higher hopes that the economy will improve next year and I believe it will be better than this year, but Macau really needs to open up to Hong Kong as soon as possible.”
Each of the operators pledged cooperation with the government’s new agenda. Lawrence Ho, chairman and CEO of Melco commented, “We are honored and grateful for the Macau SAR government’s granting of the ten-year gaming concession to the Company, and we are thankful for the government’s running of a smooth and transparent process.
“Melco pledges its commitment to supporting the healthy and sustainable development of the tourism and leisure industry in Macau as we continue to work with the government over the next 10 years to contribute to the city’s development as a preeminent, global tourism destination.”
Pansy Ho, managing director of MGM Grand Paradise SA, the local concession-holding entity of MGM Resorts, says she is “very optimistic” about boosting visitors to Macau, saying that she thinks the volume of tourists arrive each year in Macau could exceed 40 million.
Ho said MGM would spend almost $2 billion on non-gaming amenities, including revamped entertainment, more meetings and conventions, cultural and artistic events, and a special “legacy” tour featuring small and medium sized restaurants. And to top it off, the company will create an “Urban Oasis,” an “all-new landmark of health and wellness tourism” based on “sustainable living art,” and “provide comprehensive health and wellness care services for urban customers.”
Meanwhile, the chief executive Ho said he hopes the operators will “deliver on their corporate social responsibilities regarding protection of local employment and promotion of upward mobility of local workers.”
Bloomberg reported Friday that share values have risen more than 60 percent this month, but all are still trading well south of where they were before the pandemic. Per the International Business Times, this year operators could see their weakest annual revenue ever, with only US$4.835 billion posted between January and November, down 86 percent from the same period in 2019.
The new concessions begin January 1, 2023 and ends December 31, 2033.