MGM China Holdings is contemplating expanding one of its casino resorts in Macau by adding hotel rooms and wellness services, aiming to attract a broader customer base beyond traditional high rollers, according to a Bloomberg report. Sources close to the matter revealed that the company is consulting with designers and planners about potentially adding a wellness-themed building to its Cotai resort, which is Macau’s equivalent of the Las Vegas Strip.
The proposed expansion could include hundreds of additional hotel rooms along with spas and health treatment services. These plans are still in the early stages and may change. Currently, MGM has around 2,000 rooms in Macau, the smallest hotel portfolio among the city’s six casino operators.
Focus on non-gaming offerings ?
According to the report, this initiative is part of MGM’s strategy to enhance its non-gaming offerings and draw in mass-market tourists, particularly those with higher spending power, known as the “premium mass” segment. These tourists typically spend thousands of dollars a day. MGM China has yet to comment on these developments.
In line with this strategy, MGM plans to open a new art museum and wellness centre offering traditional Chinese medicine later this year at another Macau resort, located a 15-minute drive from Cotai. Other casino operators, such as Sands China, have also been expanding their non-gaming amenities to attract a broader customer base.
Impact of regulatory changes ?
China’s crackdown on junkets, which were agents that helped casinos attract high rollers, has nearly eliminated the VIP segment. As a result, the mass market, which accounted for about 50 percent of Macau’s total gaming revenue before the COVID-19 pandemic, made up roughly 75 percent in the first quarter of this year.
MGM’s market share of gaming revenue increased to 17 percent in the first quarter from 10 percent in 2019, thanks to a significant expansion of its gaming tables, an upgrade of resort facilities, and the early adoption of technologies for efficient table management and identifying potential high-value players.
Investment obligations and plans ?
Under the terms of a 10-year gaming licence extension agreed with the Macau Special Administrative Region (SAR) Government in December 2022, MGM China must invest $1.9 billion (€1.77 billion) in non-gaming projects at its two Macau resorts by 2032. This investment is part of the company’s broader strategy to diversify its offerings and attract a wider range of tourists.
MGM China is reportedly focusing its mandated investment on wellness offerings and additional hotel rooms. With around 600 rooms at MGM Macau and about 1,400 at MGM Cotai, the company has the smallest number of hotel rooms among Macau’s casino operators. In comparison, Sands China offers approximately 12,400 rooms.
Industry trends ?
Macau, under Beijing’s direction, has significantly reduced the number of junket operators, who previously kept the high-roller rooms busy. This move aims to curb the outflow of money from the mainland through Macau. As a result, casinos are now targeting the premium mass market, general public consumers who are willing to spend substantial amounts of money on both gaming and non-gaming activities.
The concept of integrated resorts, which includes casinos, hotels, convention facilities, entertainment venues, luxury shopping, and fine dining, continues to evolve. MGM’s focus on wellness is in line with industry trends, as seen with Sands’ plan to introduce a Canyon Ranch wellness retreat at its proposed Long Island destination in New York, should it secure a casino licence.?
SiGMA East Europe Summit
Find out more about the latest updates and trends in the industry, from latest regulatory news to most recent innovations at the upcoming?SiGMA East Europe?Summit happening in Budapest from 2 – 4 September.
