Gaming – Analysis | Local scholar: New Vegas flight not a threat to Macau

Carlos Siu

Carlos Siu, a gaming scholar at the Macao Polytechnic Institute, has told the Times last week that although the advantage that Macau holds in its “border-­location strategy” is diminishing, the new Hainan Airlines route connecting Beijing and Las Vegas will not present a significant threat.
From December, Hainan Airlines are expected to operate three weekly flights linking Beijing with Las Vegas, and becoming the first Chinese carrier to fly passengers to the world’s second largest gambling hub.
Concerns have been voiced that the new route could further divert Chinese VIP and mass-­market gamblers away from Macau, adding further to the territory’s gaming troubles.
Siu explained that to some extent, the new route represents the growing wealth of China’s middle class, which is looking for “longer vacations in distant places.”
He warned that as China’s population becomes more internationally-savvy, they are likely to look abroad to other gaming cities, not just Macau, which currently exists as the only legal gambling center in China.
“It is inevitable that mainland Chinese residents will have more opportunities to visit different gaming cities, not only in the U.S., but also in Europe and other places,” he said. “Since there are no major differences in gambling in different tourism destinations, it is imperative for Macau to better develop its non-gaming [segment] to increase its appeal [to Chinese tourists].”
Back in 2014, in a study by Carlos Siu and John Crossley of the Florida State University entitled “Las Vegas versus Macau as Diversified Travel Destinations,” the authors noted that Macau’s success, deriving from its “border-location strategy” next to Hong Kong and mainland China, was diminishing.
“This comparative advantage will start to erode in the future as more regional destinations such as Singapore, the Philippines and South Korea [expand] their gaming industry […] seeing the tourism and economic benefits that such a strategy can have,” the study read.
However, Siu also said that Macau’s success has historically stemmed from its ability to attract tourists from neighboring, densely populated urban areas, such as in Guangdong. Other rising gaming hubs in the region, even in nearby Singapore, cannot compete with the close proximity of the MSAR, nor its comfortable Chinese-friendly culture.
“Given that visitors to Macau were primarily from Guangdong, Fujian, and nearby provinces, the impact [of the new route] would not be very significant,” Siu concluded, noting that the flight will be targeting customers living in regions closer to or in Beijing.
Even among the decreased numbers of VIP gamers in Macau, many of which may hail from the Chinese capital, Las Vegas remains a lengthy 11-hours away from Beijing, while Macau is just four.
The aforementioned 2014 study also noted that over a billion people reside within a two-hour flight of Macau and three-fifths of the world’s population within five hours. Therefore, an ample supply of gamblers and tourists will remain within the city’s reach.
Siu compared it to the effect on Hong Kong of a Disneyland opening in Shanghai. He said that the Shanghai Disneyland would be attracting customers from the eastern and northern parts of China and implied that Hong Kong will remain more convenient for tourists from southern China.
Siu added that while Las Vegas holds a unique appeal internationally (and domestically within the U.S.), this appeal is somewhat embodied in its cliché of “what happens in Vegas stays in Vegas,” and is therefore limited in its targeting of ‘adult’ visitors as it lacks family-friendly entertainment.
“Las Vegas has successfully created the image of being trendy, cool and sexy for adults over the years,” assessed Siu. “[The cliché] implies that adults can break away from their daily duties, relax and [turn] wild in Las Vegas. For this reason, Las Vegas can be particularly fun for young adults who want to try new things, but not so much for the family group.”
Siu therefore stressed the importance of Macau’s economic diversification with an expansion into other tourism markets, even if Las Vegas specifically does not present much of a threat. “Macau needs to develop its distinctive personality in face of challenges posed by different tourism destinations in the world,” said Siu.
Hainan Airlines has announced several expansions in recent years such as the purchase of a stake in Portugal’s national carrier TAP. Its announcement regarding its Las Vegas route comes at an unusual time, in the midst of Chinese president Xi Jinping’s anti-corruption campaign.