Cotai to become the casino hub in Macau

The casino developments in Cotai are set to help the gaming area outshine Macau Peninsula, changing in a similar way to Downtown Las Vegas and the Strip.

Macau.- Senior Partner of US-based consultancy Global Market Advisors LLC (GMA), Andrew Klebanow, said that Cotai’s developments will likely surpass the Macau’s downtown peninsula gaming zone, which would become the second casino hub in the territory.

The consultant told GGRAsia during an interview that Macau’s gambling market could probably change in a similar way as Las Vegas, when the Strip managed to become the main casino territory, leaving Downtown Las Vegas in second place. He commented to the news outlet that what the industry can expect to see is a pattern that was witnessed in Las Vegas, dating back to the opening of the Mirage in 1989 and the succession of casino resorts that opened on the Las Vegas Strip through the 1990s.

“Downtown Las Vegas devolved into a second tier gaming destination, attracting people with low-priced accommodations, cheap food and better gaming odds. Not only did that not stop the loss of market share to the Strip, it prevented downtown owners from reinvesting in their properties… In short, the [Macau] Peninsula casinos with one or two notable exceptions, will continue to lose market share to those more alluring properties on Cotai.”

Whilst the majority of the casinos would survive the change, “some of those properties will be sold to more nimble operators or to people and companies that think they can operate those casinos better than their predecessors.” Klebanow added that the continued growth in market share by the casinos on Cotai is inevitable. “While we expect the centre of gravity to shift to Cotai over time, the recent better results of Cotai operators relative to SJM Holdings and MGM China has more to do with Cotai operators adding incremental capacity over the past two years or so, not necessarily just because they are more Cotai oriented. The casinos in the main downtown cluster – including Grand Lisboa, Wynn Macau and MGM Macau – are still doing fine, especially considering the new supply coming online on Cotai.”

Furthermore, Senior Director of Gaming, Lodging and Leisure at Fitch Ratings, Alex Bumazhny, believes that Cotai’s target casino floors and hotel towers are better positioned to attract base mass business.