Tuesday, June 12, 2007

Are Hotels Betting on Gambling in Asia?

Legalized hotel gambling in Asia is poised to create huge revenues and huge booms in tourism, which in turn means major development for the hospitality industry. The great success seen in Macau has caused the rest of Asia to re-think what was once an anti-legalized gambling attitude. Moreover, the increase in middle class residents has allowed more local disposable income, which has continued to fuel the hotel gambling economy.

Macau, a former Portuguese colony until 1999, recently overtook Las Vegas as the number one gambling economy in the world according to industry reports; but it has taken a number of years. Since the laws changed in 2002 to allow foreign entrepreneurs to open casinos, the Macau market has boomed. What is driving most of this growth? Slot machines. As a relatively new Chinese territory, Macau has been called the "Las Vegas of Asia" by many in the Asian gaming industry.

Even China is considering allowing gambling casinos within hotels on Hainan Island in the South China Sea with a Macau-like casino concession structure. Hong Kong is also slated for some type of gambling status in time for the 2008 Beijing Olympics.

Singapore is now re-considering their unpopular stance on gambling, having dropped their 2005 ban. In spite of mild protests from religious and social groups, Singapore is planning a $3.1 billion Resorts World at Sentosa and $3.2 billion Marina Bay Sands Hotel and Casino estimated to be completed sometime in 2009. According to gambling industry sources, Singapore Prime Minister Lee Hsien Loong is said to have told his parliament that "Singapore cannot stand still. The whole region is on the move. If we don't change, where will be in 20 years?"

The hotel industry is no stranger to the complicated menagerie of tightly controlled government regulations that impact a hotel's day-to-day operations. Gambling is another creature controlled by administrative regulations and should be approached with the same caution. Savvy hoteliers will educate their managers accordingly and seek the advice of counsel familiar with local gaming laws to reduce their risk of failure.