Macau’s casino vision has helped transform it into the ‘Las Vegas of Asia’, writes Peta Tomlinson.

When the $1.1 billion construction of Macau International Airport began in 1989 it was by far the biggest project ever undertaken in Macau.

How times have changed. For what seemed at the time to be an ambitious project for the tiny Special Administrative Region (SAR) in southern China has now been dwarfed by a seemingly never ending string of tourism and gaming mega-projects, each more grandiose than the last.

The development frenzy of recent years has brought unprecedented arrivals to Macau, at times leaving its airport struggling to cope with demand.

And drawing a roadmap for the way forward is proving both exciting and challenging, for the stakeholders involved. Though only 28 square kilometres in size, Macau has long been a region of prosperity.

In the Ming Dynasty (1368-1643), Chinese fishermen moved there to trawl the mouth of the Pearl River Delta, and utilise its sheltered harbours as their southern-most trading centre.

In the early 1500s, Portuguese navigators arrived; soon after Portugal established Macau as a trading colony of its own, where it was to remain that way until the 1999 handover to China, becoming the last European territory in Asia.

Under Portuguese rule, gambling had long been part of Macau culture, and upon handover, it became the only place in the vast People’s Republic of China where casinos were legal.

This – and the opening up of Macau’s casinos to foreign ownership, breaking the monopoly of Hong Kong tycoon Stanley Ho Hung-sun – was to change Macau’s fortunes forever. Suddenly propelled into the stratosphere of gaming opportunity, Macau was targeted by the world’s highest rollers.

Las Vegas Sands received the first foreign gaming permit seven years ago, spent $250 million on its first casino and thanks to a flood of Chinese gamblers, made its money back in one year.

It has since added the new $2.4 billion Venetian Macau and others rushing to build casinos in the newly dubbed ‘Las Vegas of Asia’ included the US gaming powerhouses Wynn Resorts – with the $1.2 billion Wynn Macau – and MGM Mirage which opened the $1.25 billion MGM Grand Macau in 2007.

The Venetian Macau is billed as the world’s biggest casino, with 3,000 hotel suites, 1,150 gaming tables, 7,000 slot machines, 350 shops, a 1,800-seat conference centre and a 15,000-seat entertainment arena.

But Australia’s James Packer, in partnership with Lawrence Ho, the son of Hong Kong’s Stanley Ho, aims to give The Venetian a run for its money with its gargantuan three-casino complex, called the City of Dreams. In a classic case of ‘build it and they will come’, the casinos drew more visitors than even those on the ground could have imagined.

And their continued popularity helped ensure that Macau welcomed a record breaking 30 million visitors in 2008 – an 11% rise on 2007 and nearly 400% up on a decade ago. True, figures did decline in the last few months of the year and some of the casinos have even had to lay off staff recently as the global recession has begun to impact on the region. However, the Macau Government Tourist Office (MGTO) is hopeful that the current economic downtown won’t do any long-term damage to the SAR’s winning hand.

Indeed, it remains ‘optimistic’ about 2009 as Macau celebrates its 10th anniversary, although director Joao Manuel Costa Antunes admits that his organisation’s efforts this year will concentrate more on ‘cultural tourism’. Says Antunes: “The continued diversification of tourism products and source markets are the main objectives for this year.

We will utilise tourism resources to enhance the development of cultural tourism. Thematic tour routes will be developed to attract visitors of different interests, while multi-destination tourism itineraries will be explored to build up a regional tourism brand.”

Although it may not appeal to gamblers, there is no denying that the territory’s prize cultural asset is its historic old centre, a designated UNESCO World Heritage site that was popular with visitors long before the casinos arrived.

While there are various ways to enter Macau – by ferry from Hong Kong or the Chinese mainland, via People’s Republic of China (PRC) border crossings, or, in future, by the proposed Hong Kong-Macau- Zhuhai bridge project – there is only one airport, and it has certainly been one of the main beneficiaries of Macau’s casino vision.

In fact, last year’s drop in passenger numbers, (when throughput fell 7% to 5.1 million from the 2007 all-time high of 5.5 million), was only the second time Macau International Airport has registered a year-on-year decline in traffic since its 1995 opening.

Years of double-digit growth have indeed led operator, CAM, to draft plans to upgrade the airport’s key infrastructure to avoid it becoming a victim of its own success.

The master plan, which is subject to final government approval, includes proposals to expand the existing passenger terminal to double the airport’s capacity to 12mppa. The extension will allow for the addition of more shops and restaurants, six new boarding bridges and enhanced IT systems designed to improve the airport experience for passengers and subsequently satisfaction levels.

Macau International Airport will also benefit from an upgraded Communication, Navigation and Surveillance (CNS)/Air Traffic Management (ATM) system and fire rescue facilities to meet future demand and high safety standards.

New aprons allowing for additional aircraft parking and other airfield enhancements are expected to raise today’s runway capacity from 16 to 28 movements per hour. The gateway will also get a new 1,000-vehicle car park.

Says executive director Suning Liu: “We have already started to improve the infrastructure to better equip Macau to cope with long-term demand at the same time as ensuring safe, efficient and effective aircraft operations.”

Funding for the gateway’s development programme will be 100% provided by CAM, whose shareholders include the Macau Government (55.4%) and Macau casino billionaire, Stanley Ho, whose STDM company holds a 33.3% stake in the airport.

However, with passenger throughput expected to remain around the same level this year, the need to raise the gateway’s capacity is not as urgent as it was a year ago and CAM now has the luxury of implementing the master plan over the next five to ten years.

Nevertheless, with all the glitz and glamour of the casinos on its doorstep, does Macau International Airport need to glam up to meet the expectations of travellers? Macau is beyond question the Las Vegas of the East, and according to local government figures, the tiny territory has overtaken Las Vegas as the world’s biggest earner of gambling revenue, once again raking in more than $10 billion in 2008.

When formulating its wish list for the future, it comes as no surprise to learn that Macau’s airport management looked to the entertainment capital of the world, Las Vegas, for inspiration. Recognising the similarities, CAM sent a delegation to Las Vegas-McCarran International Airport “to discuss issues in common”. Liu, who led the delegation, said the mission’s aim was to “share experiences, learn from the past experience of McCarran, to ascertain their business model and to see how they plan their future developments to cope with their growing numbers of visitors”.

They learned that Las Vegas’ diverse entertainment and gaming facilities attract around 90 million visitors per year, making McCarran the second busiest origin and destination (O&D) airport in the world, second only to Los Angeles, according to director of aviation, Randall Walker.

Despite these huge passenger numbers – and significantly for CAM executives – Walker noted that most of his airport’s income is from non-aeronautical streams. A completely self-sufficient enterprise, requiring no government subsidy, McCarran International Airport earns 60% of its income through fuel surcharge, food and beverage commissions, transportation services, parking, car rental, corporate advertising – but mostly through the rich ace up its sleeve, slot machines, which are spread throughout the airport terminals.

In fact, McCarran has 1,300 slot machines strategically placed across the terminal that regularly contribute annual revenues in excess of $40 million.

In the past, the total has accounted for up to 20% of the airport’s non-aviation revenue and 11.5% of total revenue for the Department of Aviation.

With the stakes so high, and with gamblers 'instinctive willingness to empty their pockets of every last cent, are airport slot machines something that Macau International Airport might consider?

The official line is that such a concept “should be considered very carefully to see how to balance profit and social responsibility under existing regulations.” CAM’s executive director, Suning Liu, wouldn’t be drawn, though marketing director, Antonio Rato concedes that airport slot machines may be inevitable. Indeed, the law already allows for them.

Says Rato: “The possibility of the airport having slot machines was created in law, but only at the departures restricted area, meaning that only passengers waiting for their flight can eventually access them. So, we cannot have the situation of Las Vegas airport where slot machines are all over the place and in massive quantities.

“Personally, I would not like to see Macau Airport following the same pattern. However, I also think we should implement it, with good sense, as it is a source of potentially significant income that CAM needs not only to help finance the development but also to cover some of the operating costs, allowing us to keep aeronautical prices at highly competitive levels.

“Up until now there has been some reluctance in applying the airport’s right to operate slot machines, but doing it seems logical as the airport is in Macau and should reflect the city’s entertainment and fun conceptual definition.”

Does some form of gambling have a future at Macau International Airport and, indeed at other airports across the Asia-Pacific region? You can almost bet on it.

ASIA-PACIFIC AIRPORTS/JANUARY-MARCH 2009