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Asian high rollers feeling the pinch of credit crunch

Written by editor

Macau, which has replaced Las Vegas as the gambling capital of the world, is showing an “industry-wide slowdown” as a result of the financial crisis enveloping the US and world economy, while other v

Macau, which has replaced Las Vegas as the gambling capital of the world, is showing an “industry-wide slowdown” as a result of the financial crisis enveloping the US and world economy, while other visitors decide to stay home, according to gaming industry analysts.

“There is evidence that spending by tourists in Macau is softening,” said Jonathan Galaviz, a partner with Nevada-based travel and leisure consultancy, Globalysis.

Official Macau government figures show “average” hotel occupancy rates fell 7.1 percent to 76.7 percent in August, compared to a year ago. “Certainly the financial crisis is going to have a noticeable impact. The recent shocks to the global economic system have definitely impacted the psyche of the Asian leisure market.”

Analysts point out, part of the drop can be attributed to recent moves by Beijing to impose “restrictions” on mainland Chinese visiting Macau, which fell almost 10 percent in August. Local media reported gaming revenues dropped 3.4 percent to around US$860 in September, the first such decline since 2006.

However, visitor numbers from Southeast Asia have soared 119.2 percent over the same period. “Sometimes, during an economic adversity people actually gamble more,” according to David Green, Macau-based gaming practice director of Pricewaterhouse Coopers.

Despite the gaming industry showing signs of “softening”, Asia is expected to continue being a bright spot for long-term sector growth, and Macau’s casino sector should be able to capitalize upon this growth over the next decade, say analysts.

In a recent report in The Wall Street Journal, CEO of Las Vegas Sands, Sheldon Adelson has agreed to lend $475 to his company, in a sign of confidence that his company would weather the current global credit crunch.

Las Vegas Sands operates two casinos in Macau, including the Venetian, and is building the Marina Bay Sands, one of the two Singapore integrated resorts.

Singapore tourism, which is projecting 15 million visitors in the first year of operation on the completion of its two multi-billion dollar integrated casino resort projects to mark its entry into the high-stakes gaming tourism will be hoping it will coincide with the expected economic upturn globally “in a year or two.”

Krist Boo, vice president for communications at Malaysian-owned Genting Highlands International, which is developing Resorts World at Sentosa Integrated Resort scheduled for opening in early 2010, maintains the company is optimistic about its future prospects. “We remain confident.”

Bill Eadington, economics professor, and director of the University of Nevada Institute for the Study of Gambling and Commercial Gaming predicts Asia’s gaming sector will weather the turmoil better than Las Vegas. “I don’t think this will end the Asian gaming boom.”