Case Study # 1 : Macau : The New "Las Vegas of the Far East?"

Macau has one of the most vibrant economies in China. Until1999, it was a Portuguese colony that, like Hong Kong, is now a SAR of China. It is situated close to Hong Kong on the PearlRiver estuary; the catamaran from Hong Kong to Macau takes less than one hour. Macaus economy is unusual in that only 2% of its land is cultivated; its main industries are textiles and gambling. Almost 30% of Macau's population is directly employed in gambling, hotels, and restaurants. Some believe that over 90% of Macausemployment will derive directly and indirectly from gaming and tourism. Macaus economy has been given a boost by its separation from the Chinese economy (effectively a two-economies policy); a relaxation of the gaming laws, which has produced an upsurge in foreign direct investment; an increase in the number of visitors from the mainland (in part a possible consequence of the Golden Weeks and increased leisure time) and the opening of its first international airport in 2006. Gaming in Macau will be given a further boost as companies that may be found in Las Vegas are now to be found in Macau. The emphasis is on luxurious hotels, luxurious gaming rooms, and luxurious surroundings. Between April 2007 and December 2007 no less than eight new megaresorts are to be opened. These include the MGM Grand Macau, the Venetian, and the Sands Macau. Each of these brands is instantly recognizable as coming from Las Vegas. The attractions of the eight megaresorts other than gambling include restaurants, spas, convention centers, retail plazas, nightclubs, theatres, health clubs, fitness centres, and even a performance lake!

The eight resorts will add almost 6,000 rooms to Macaus room stock and nearly3,000gamingtables. All of this represents a colossal investment that is in the region of HK$43 billion. This huge investment is a massive upgrade in facilities and is aimed at putting Macau on a par with Las Vegas. However, there are three differences between the two resorts that may prevent this. First, hotel occupancy in Las Vegas is much higher than that of Macau as is the length of stay, canMacaufill 6,000 extra rooms? At present only halfofMacaus visitors stay overnight. Second, if the investment is to be worthwhile then expenditure by visitors must be much higher and redistributed; as an example, only 41% of expenditure in Las Vegas is on gambling and Las Vegass visitors spend ten times more than Macaus visitors on non-gaming items. Many of the facilities of the new megaresorts such as theatres and shopping malls require different spending patterns. Finally, the last imponderable one is that the market that Macau is aimed at is predominantly mainland Chinese; WillaLas Vegas experience be culturally suited to them? What adjustments may be made to accommodate the preferences of this group? Already all eight restaurants at one of the resorts are Chinese and the rooms are priced to suit the middle-class Chinese pocket, what other things may be changed?

Case study questions

1. Do you think it advisable to set up a Chinese Las Vegas?

2. In your opinion, do the developments as outlined fit with the Chinese culture?

3. What might Macauhave to achieve to adjust the spending pattern?

(100 words or more for each question)