Las Vegas 2.0:The Chinese Megacity of Macau that Makes Las Vegas Look Small
Do you know the wealthiest place in the world? If you were thinking ‘Las Vegas’ then you’re close, but not quite. Surprisingly, it’s China’s Macau that has built a reputation for the richest city in the world, with its gaming industry making more money over the past decade than Las Vegas itself.
The Las Vegas of Asia
Macau, China’s gamble hub, is quickly on its way to replacing Las Vegas as the wealthiest and the most glamorous city in the world. According to a research from the University of Nevada’s International Gaming Institute, Macau is following in Las Vegas’ footsteps and adopting a similar diversification strategy as the Sin City 15 years ago. However, the new gambling capital of China is still targeting the local clientele and will need to expand its target audience in order to see growth in gaming revenue.
Macau News Agency (MNA) recently learned from the International Gaming Institute of University of Nevada that the gaming industry in Macau is following the same diversification strategy as Las Vegas did almost 15 years ago, but with an emphasis on its Chinese audience. Over the past couple of decades Las Vegas has seen expansion thanks to its gaming industry, and now Macau is following a similar trajectory.
The growth hasn’t been very apparent in this Chinese city because most of the revenue is in the gambling business whereas non-gaming amenities like hotels and restaurants are still undergoing steady development
Diversifying the Entertainment Business
Brett Abarbanel, the research director at UNLV Institute said that the non-gaming industry has potential for significant growth in the future thanks to the investment efforts from companies like Las Vegas Sands Corp. which poured $2 billion this year alone into its Macau operations.
During the recent Asia Gaming Summit in Taipei, Abarbanel said that while Las Vegas’ gambling business suffered a huge setback during the economic recession of mid 2000’s, the city was able to generate sizable revenue from its non-gaming businesses including nightlife, exhibitions, meetings, conferences and esports. According to the IMF, the city is forecasted to leapfrog Qatar by 2020 in terms of purchasing power and GDP per capita at an astonishing $143,000 per person !
Macau is situated on the southern coastline of China, just off the Hong Kong border and the two cities are governed as special administrative regions due to their economic activities which essentially gives them a greater degree of freedom when it comes to trade and business activities.
Even though Macau has a relatively modest population of only 650,000, the city is home to some of the wealthiest people in China with one of the highest per capita GDP in the world.
Sin City on Steroids
Macau is also the gaming hub of Asia, similar to Las Vegas in the United States but with everything turned up a notch; ever since people started to visit the city from mainland china in 2003, the city has become a hotspot for gaming activity and its revenue generated from gaming is five times larger than the gaming revenue of Las Vegas! The increase in visitors to the city was in part due to lesser travel restrictions along with a dramatic increase in local wealth which prompted wealthy individuals to divulge in gaming and gambling activities.
Macau can be considered as a Las Vegas 2.0, or Vegas on steroids with everything turned up to eleven; the city has consistently generated higher revenue than Las Vegas from gaming activities, in fact, the city is emulating Vegas in attempting to diversify its income in a bid to reduce the dependence of the local economy on gaming related businesses and similar to Las Vegas, Macau is now delving into the entertainment side of things.
Currently the non-gaming activities only account for 12% of the city’s total revenue, but the government is aiming to imitate Las Vegas by promoting other activities including nightclubs, sports arenas, Broadway style shows, e-sports and exhibitions. An influx of business activity in these sectors means that the city is expected to emulate Las Vegas by increasing it’s non-gaming revenue to 65% in the coming decades. These steps by the local government are paying dividends with the average non-gaming revenues increasing by 16.4 percent every year with 2017 being the highest grossing year totaling $7.6 billion in non-gaming revenue.
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