The first time I visited the small Portuguese colony of Macau, more than 25 years ago, I hired a Mini Moke open-top car and drove across the single bridge from the Macau Peninsula, through the quiet island of Taipa, then down a long causeway – breakwater boulders and broad expanses of open sea on both sides – to sleepy Coloane.
Today, that causeway is the main drag of the Cotai Strip, the focal point of the massive area of reclaimed land that has merged Coloane and Taipa (hence “Cotai”) into one huge “island”, a casino and leisure destination unlike any other in this part of the world – and one that against the odds is still growing apace.
Hotel gold rush
The Cotai district was born from the astute business mind of Sheldon Adelson, CEO and chairman of Las Vegas Sands and Sands China Ltd, who envisioned Macau as Asia’s Las Vegas and somehow persuaded the Macau government to fill in the sea between its two islands and allow him to build the first of many architectural wonders: The Venetian Macao, which opened in 2007.
“Actually I wanted 20 properties but we only got six lots to build on,” Adelson said during the opening of The Parisian Macao – Sands China’s seventh and final Cotai hotel – in September last year. That monumental US$2.9 billion property, with almost 3,000 rooms and a host of retail and leisure offerings – including a half-size Eiffel Tower – brought to fruition Adelson’s dream of a massive integrated complex of multiple hotels, retail, gaming and leisure areas.
“It’s the only place in the world where you have seven branded hotel properties all under one roof, offering 13,000 rooms and suites, 850 retail shops and 2.5 million square feet [232,000 sqm] of event space,” he said. Those hotels include: The Venetian, a Four Seasons and The Parisian on one side of the main road, with a sky bridge linking them to The St Regis, a Conrad, Holiday Inn and Sheraton Grand – these latter four properties comprising the Sands Cotai Central integrated resort brand.
Of course while Sands China was busy building its resorts, other property developers were equally engrossed constructing their own dream palaces. Melco Crown Entertainment Group first built the City of Dreams, containing a Crown Towers, Hard Rock Hotel and Grand Hyatt – as well as Franco Dragone’s lauded “House of Dancing Water” showcase experience. More recently in October 2015 it launched Studio City, a cinema-themed integrated resort with 1,600 rooms and a 5,000-seat concert hall.
But Melco Crown is not finished yet: construction of another huge hotel tower is nearing completion in the City of Dreams – the futuristic exoskeleton façade of the Morpheus hotel (named after the god of dreams) promises a cool, contemporary visitor experience when it opens in 2018.
Meanwhile, in the northwestern part of Cotai, Phase One of the Galaxy Entertainment Group’s Galaxy Macau complex launched in 2011, comprising the 1,500-room Galaxy Hotel and the smaller Banyan Tree and Hotel Okura properties opposite. In 2015 Phase Two was completed, adding the Broadway Hotel with its own 3,000-seat theatre, plus a JW Marriott and all-suite Ritz-Carlton. The space between the three towers houses a huge casino and a mall filled with shopping and dining outlets. Above them is the Grand Resort Deck, a water-themed leisure centre of grand proportions that is Galaxy Macau’s standout attraction. But although the group already offers nearly 4,000 rooms, suites and villas, Galaxy Entertainment Group is only half done: Phases Three and Four of Galaxy Macau are yet to be constructed on lots to the south.
Then there’s one of 2016’s most high-profile openings: the US$4.2 billion hotel-resort Wynn Palace. The Cotai offering from Las Vegas maestro Steve Wynn is a gilded haven of hospitality, with entry to the hotel possible via cable car past golden dragons and across a performance lake with a sound, light and water show every half-hour.
But if you’re thinking there can’t be room for any more mega-resorts – think again. MGM Cotai, built to resemble a pile of Christmas boxes, is scheduled to open in the second half of this year after a number of delays, while to the south of Wynn Palace an enormous set of buildings is in mid-construction, slated to open in 2018. This will be the Grand Lisboa Palace, incorporating the 1,400-room eponymous hotel, plus a Karl Lagerfeld Hotel and a Palazzo Versace Macau, each with approximately 390 rooms and suites.
Finally, just to the south of Cotai proper, on what was once the northern shore of Coloane Island, the Louis XIII uber-luxury hotel is planning to open this summer, complete with 200 outrageously opulent “villa” rooms said to have cost US$7 million per room, and complimentary hotel transfers in Rolls-Royce Phantoms. You get the picture.
Shifting focus
All is not completely rosy in Macau’s hospitality industry, however. Despite the reluctance of hoteliers to discuss Cotai’s raison d’être in detail, the truth is the whole shebang was built around the love of mainland Chinese for gambling. Initially, casinos played a central role in every integrated complex, and in the early stages of Cotai’s development the hotels couldn’t keep up with demand.
But things change. China’s high-profile anti-corruption campaign drove high rollers away from the gaming tables, and from 2014 to early 2016 gaming revenue declined monthly for almost two years straight. The Macau government encouraged casino operators to diversify their businesses and bring the proportion of gaming space down to no more than 9 per cent.
In response, Sands China, Melco Crown Entertainment, Wynn Macau and Galaxy Entertainment have all turned to the mass-market tourist segment, developing and marketing their resorts as family-friendly destinations with fantastic leisure facilities and abundant retail and F&B options to suit a range of budgets, from the Broadway Hotel’s authentic Food Street to a dozen or more Michelin-rated restaurants scattered throughout the properties.
“You’ve got to be fleet of foot in terms of service and products and consumer trends,” says Kevin Clayton, chief marketing officer of Galaxy Entertainment Group. “I think it’s more about state of mind than demographics – you’re tapping into a mindset instead of a demographic through the message you’re sending, matching experiences not products with consumers who are on a journey of discernment.”
The resort complexes are also bringing world-class theatrical and sporting extravaganzas to Macau, from shows like Thriller at The Parisian Theatre and the House of Magic at Studio City, to the aforementioned House of Dancing Water, Broadway and West End hits, Cantonese and other Asian pop concerts, and boxing championship fights. The government is wading in as well with sell-out music concerts and large-scale sports events at the East Asian Games Dome.
No one is pretending the draw of the casinos isn’t still a huge part of Cotai’s continuing appeal, but the focus is now firmly on promoting it as a shopping and leisure destination in its own right, with good clean family fun for tourists from every demographic.
“The Sheraton Grand is positioned very much as a family hotel, while customers of St Regis come for the recognition and personal service; they know the brand well and want to spoil themselves,” says Janet McNab, managing director of Sheraton Grand Macao Hotel and The St Regis Macao.
But McNab also highlights another major market for Cotai’s properties: the events industry. “Where else can you get 10,000 plus delegates in one place, with walking access under cover to arena space, dining, entertainment, everything… it’s a fairly hard USP to match,” she says. “Meetings are a core feature of the Sheraton brand – our Cotai hotel has 15,000 sqm of events space including the Kashgar Ballroom – so MICE is a key strategy for us and it’s growing year on year, with 2016 seeing healthy growth in double-digit figures.”
For Adelson, MICE always played a significant part in Cotai’s development. “We opened the Venetian with around 8,000sq ft [750 sqm] of event space,” he says – it now boasts more than 100,000 sqm.
There’s much more to come from Sands China’s rivals, too, with Galaxy Macau’s Phase Three and Four expansion projects of particular interest to industry onlookers. Francis Lui, executive director of Galaxy Entertainment, reportedly said that 97 per cent of the developments would be non-gaming, targeting family guests and MICE. With an estimated investment of HK$50-60 billion (US$6.4-7.7 billion), they will include a multipurpose 10,000-seat arena, a 50,000 sqm convention centre and 5,500 hotel rooms, all spread out over one million sqm.
“Phases Three and Four will be huge for us in the context of MICE,” says Clayton, “but we have to make sure we offer something different, and likewise with family-focused tourism… it’s not just about adding capacity, it has to be something exciting to the trade and to us.”
Awaiting infrastructure
While the private sector forges ahead at speed, government infrastructure projects designed to facilitate an influx of tourists and delegates have unfortunately been plagued with delays.
“Two catalysts will help to grow Macau’s MICE business – the Zhuhai bridge, which will give it a dramatic boost, and the LRT [Light Rail Transit],” says Sands’ Adelson. The Hong Kong-Zhuhai-Macau Bridge stretching 50km across the Pearl River Estuary is an impressive feat of engineering, with the longest bridge section spanning 29.6km of water. It is currently scheduled to be complete by the end of this year… a year late. When complete, it will bring Macau within an hour’s drive of Hong Kong and Hong Kong International Airport in particular, opening up the potential for events to be shared between the three locations, for example mixing up large-scale conferences and exhibitions in Hong Kong or Zhuhai with incentives and special events in Macau. It will also allow increased volume of tourists from Hong Kong by coach rather than just ferries.
The new Taipa Ferry Terminal, after more than ten years of construction and delay, is now scheduled to open in May – though at more than 200,000 sqm it seems oversized for its purpose of serving ferries from Hong Kong and Shenzhen, dwarfing the small existing facility currently in use next door.
Meanwhile, visitors crossing the land border from Zhuhai to Macau will have to wait some time for its LRT system to carry them in a convenient loop around the peninsula, as is planned. The first operating section of the LRT will be a U-shaped line from Barra on the peninsula, across the Sai Van Bridge to Taipa, and thence in a southerly arc around Cotai – the southernmost station serving Lotus Bridge, which connects Macau with Hengqin Island, part of Zhuhai’s free trade zone – before ending at the small international airport and Taipa Ferry Terminal.
This much-awaited section is due to come online in 2019, making travel around Cotai a breeze. “The LRT will be great for our business, and we can only be positive about the future,” says Clayton.
McNab agrees: “You’ve got to put your ‘destination hat’ on. Macau is bursting with potential, and any increase to infrastructure is a good thing.”
Big picture plans
At the annual press conference of the Macau Government Tourism Office (MGTO), its director, Maria Helena de Senna Fernandes, stated that total visitor arrivals to Macau in 2016 were a record 30.95 million. While this is only a 0.8 per cent year-on-year increase, significantly it represents a 7.9 per cent rise of international visitors, which falls in line with Macau’s aspirations to build a “world centre of tourism and leisure”.
To that end, the MGTO has participated in 60 international travel fairs in the last year, and is working hard to create new events with mass appeal. These include the Macau Food Festival, Macau Film Festival and Awards, a shopping festival, Oktoberfest, an international gastronomy forum, international marathon and the Macau International Travel Expo, as well as new tourism projects such as the Ka Ho Village of our Lady on Coloane, the Macau Wine Museum, and remodelling of the Macau Grand Prix Museum – the Grand Prix and Firework Display Festival already being landmark events with international fan bases.
Hong Kong and Taiwan are big sources of custom for Macau, followed by Korea and Thailand, whilst the only long-haul source market of significance comes from the US. But new target markets reach as far as South America. “We are working hard to expand the Brazilian market, where there is much room for growth,” says Fernandes.
However, Greater China still accounts for almost 90 per cent of visitors and continues to be seen as an ever-giving cash cow. With average hotel occupancy at 83 per cent in Macau’s 113 hotel properties (totalling 37,634 rooms), competition is fierce and there’s been a 12.7 per cent decrease in hotel prices. But developers have clearly not been deterred.
“We’re in the centre of one of the largest growth markets in the world, certainly in terms of outbound tourism,” says Clayton. “Macau’s penetration into China is still very small, and we are continually building new attractions, both individually and collectively with the government.” McNab is of the same mind. “Of course the proximity to mainland China means it’s a main feeder market, and that’s not going to slow down as second- and third-tier cities develop.”
Macau appears to have ridden the difficulties of the last few years, replacing gung ho attitude with a more careful, considered approach. Backed by cautious optimism for the future, the building continues.
