Macau

MACAU HOTEL REVIEWS:
Four Seasons Hotel
MGM Grand
Sofitel

When Sleeper visited Macau back in October, business was booming. The special administrative region of the People’s Republic of China was undergoing a dramatic transformation to become a destination to more than rival Las Vegas, and investors were pumping money into the integrated casino and hotel complexes, optimistic about prospects for the gambling tourist market.

Starting in 1962, the gambling industry was operated under a government-issued monopoly license by Stanley Ho’s Sociedade de Turismo e Diversões de Macau. The monopoly ended in 2002, and several casino owners from Las Vegas entered the market. With the opening of the Sands Macau in 2004, the largest casino in the world as measured by total number of games tables, and Wynn Macau in 2006, revenues from Macau’s casinos were greater than those of the Las Vegas Strip making it the highest-volume gambling centre in the world. In 2007, Macau’s most ambitious project, the 3000-suite Venetian opened its doors and numerous other casino-resorts were in the pipeline.

By the end of the second quarter of 2008, things were still looking good for Asia Pacific as Hong Kong reported record occupancies of 80.3%, revPAR was up 13.2% from the year-to-August 2008, and the number of visitors to Macau hit a high. Data released by the Land, Public Works and Transport Bureau showed that 56 hotels were scheduled to be built in Macau in the near future, providing a staggering 35,000 guestrooms in total. Among the 21 projects already under construction, eight would provide between 100 and 1,200 rooms, and five projects were scheduled to boast 2,000 to over 6,000 rooms.

Plans for the Galaxy Cotai Megaresort had called for a first-phase 1,500-room Galaxy-branded hotel tower to open in the third quarter of 2009, with a second tower opening by the end of the year with a 400-room Okura hotel and a 254-room Banyan Tree hotel. Galaxy has since announced that the landscaping and glass-cladding for the towers would only be completed by the end of 2009 with interior fit-out work to follow.

City of Dreams was expected to bring 1,600 rooms in the shape of a Hard Rock Hotel, Grand Hyatt, and Crown Towers, and a further four hotels including W and Ritz-Carlton were under construction at Macau Studio City at a cost of over USD$2 billion. This influx of developments, mostly centred around the Cotai Strip, was expected to double hotel room stock by 2009 and it was originally thought that Asia Pacific had escaped the worst of the economic crisis. However following the collapse of the Asian stock market, Macau’s luck has run out and a number of these projects are in jeopardy. 

The downturn claimed its first prominent victim in Las Vegas Sands. The corporation announced that it is stopping construction indefinitely on its USD$600 million Cotai Strip condominium tower, and suspending work on a number of other sites on the Strip, as well as shelving some of its development plans in China. Galaxy Entertainment Group has also made known that it is will delay the opening of its flagship Cotai casino resort from next year to 2010, citing ‘prevailing local market conditions and the substantially changed global economic environment’.

According to one local source, the expectation that tourists would stay in Macau for a few days rather than a few hours has not come to fruition, and the cooling of the three-year boom has been aggravated by Chinese travel restrictions from the mainland as the authorities seek to curb money laundering and illegal activity. In the third quarter of 2008, gambling revenue fell by a worrying 10%.

Looking ahead, the coming months may prove to be a challenging time for hoteliers and developers across Asia Pacific as the economic crisis unfolds. The region may be scaling back its ambitions, at least temporarily, but it’s not all bad news. Jumeirah, the budding Dubai-based hotel group, has recently signed a management agreement to operate a five-star deluxe hotel in Macau.