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Macao gambles on diversifying tourism industry

When visitors return from Hong Kong, friends ask "What did you buy?" When people return from Macao, they're asked "How much did you win?"

"Now Macao wants to become 'What did you win? What did you buy? And what did you see?'" says Alan Hills, who heads Montreal-based Cirque du Soleil's Asia Pacific Regional Office.

"The last part is going to take the most time," he adds.

Gambling on Macao's diversification into a leisure destination and the large potential market in the region, the Cirque, which has six resident shows in Las Vegas, launched the 150-million-U.S.-dollar permanent show, Zaia, at Venetian Macao, a giant casino resort owned by U.S-based Las Vegas Sands, in August last year.

"Right now you don't come to Macao for entertainment. We are starting to change that," Hills says.

Macao, the only place in China where gambling is legal, saw spiraling growth of the gaming industry after opening up the century-old sector to foreign competition in 2002. It has six licensed gaming operators, including U.S gaming giants Las Vegas Sands Corp. and Wynn Resorts Ltd..

The island city, home to more than 30 casinos and 4,600 gaming tables, has overtaken Las Vegas in terms of gaming revenue.

Casinos contributed more than 70 percent of the Macao government's revenues, paying about 35 percent of their income in gaming taxes. Official statistics show more than 40,000 of about 540,000 Macao residents work in the gambling sector.

To lessen Macao's overwhelming reliance on gambling, the government vowed to "appropriately diversify" the city's economy by expanding its portfolio to develop tourism and include upscale shopping malls, resorts and convention centers.

But even Macao Special Administrative Region (SAR) chief executive Edmund Ho Hau Wah admitted it would take time to achieve.

Kwan Fung, director-general of the Macao Society of Social Sciences, said: "It's critical for Macao to optimize the business model of the gambling sector to boost tourism, including sightseeing, leisure travel, shopping and conventions.

"It will upgrade hotel, retail, convention, catering and recreational industries," he says.

Growing tourism offerings

"We always have the conviction Macao has more to offer visitors than just the rolling dice," said Teresa Costa Gomes, public relations executive with the Macao SAR tourist office.

The cobbled streets, the centuries-old architecture, the piazzas and churches earned its place on UNESCO's World Heritage List in 2005.

In an area of less than 30 square km, the island city has 18 museums, focusing on art, wine, fire control, Portuguese buildings and other aspects of life.

Pop concerts and events such as music and arts festivals, a Grand Prix and dragon-boat racing pull in international visitors, Gomes says.

Luo Lishan, visiting from Zhanjiang in neighboring Guangdong Province and mother of a 17-year-old son, says Macao rates more than a day trip.

"The landscape is changing fast in Macao, and several glitzy casinos and hotels have risen up in the three years since my last visit," she says.

Cameras flash behind her as a crooning gondolier drifts on an indoor canal lined with upscale shops in the Venetian Macao resort on an area of reclaimed land known as the Cotai Strip.

Luo plans to take her son to the Macao Museum of Art in the afternoon after a look at the Sands, one of the three casinos run by Las Vegas Sands.

"I heard the museum has an exhibition of painting collections of the National Art Museum of China right now," she says.

The Macao Museum of Art, the only art museum in the city, is strikingly located next door to the golden Sands.

Museum director Chan Hou Seng attributes the strange juxtaposition to the scarcity of land.

"It's not so bad," he says. "Tourists who have just tried their luck in Sands might visit our museum for a taste of art. And some take the casino's free shuttle bus to and from the border or wharf to come here."

"Drawing a wider variety of visitors will be crucial for the diversification of Macao's gaming and tourism industries, which rely heavily on day-trippers and high-roller gamblers for profits," says Fong Ka Chio, director of Institute for the Study of Commercial Gaming at the University of Macao.

"Most of the tourists tend to gamble in the main floor of casinos rather than the VIP halls catering to the high-rollers," he says.

Unlike Las Vegas, much of the gaming revenues of Macao come from high-roller gambling, while Las Vegas earns a larger portion from non-gambling activities such as shows and shopping.

High-roller gaming accounts for about 70 percent of Macao's casino revenue, says Fong.

"Once the gross profit margin from the casino main floor increases, gaming operators will have more funds to invest in non-gaming entertainment facilities, diversifying the gaming sector," he says.

Convetion market

From July to October, the prime convention season, the Venetian Macao sees many business people wearing exhibition or conference cards trying their luck on the main floor of its casino.

Tony Lam, president of the Macao Fair and Trade Association, says the SAR government had made the convention industry a key sector for the city's economic diversification.

In 2004, revenue from Macao's convention industry was less than 100 million patacas (US$12.9 million). But the association predicts it will hit 500 million patacas this year.

Macao is fostering its own convention brand with events such as the Forum for Economic and Trade Cooperation between China and the Portuguese-speaking Countries, says Lam.

"As the infrastructure continues to improve, the convention sector has great potential to be tapped," he said.

Kwan Fung, director-general of the Macao Society of Social Sciences, says, "When Macao chose Las Vegas Sands Corp. and Wynn Resorts Ltd. as foreign concessionaires of gambling, it took into account their experience in the convention and leisure industry.

"The SAR government hopes the two companies can use their specialties to turn convention, leisure travel and other service sectors into leading industries for Macao's diversification."

Cirque du Soleil has celebrated its 500th performance of Zaia in Macao, says Hills. "We were hoping other properties will also add entertainment, because the more people that come here for the entertainment, the better off we are. Obviously if someone has the chance to stay overnight, they have the chance to see more shows."