Macau 2010

MACAU - Cigarette smoke drifts upward as chain-smoking gamblers at the Casino Lisboa yell excitedly in Cantonese. Staff scurry back and forth with trays of milk tea while prostitutes circle an outer lobby in search of customers.

It is a no-frills operation at the Lisboa, one of Macau's best-known casinos, and the tired decor seems to have changed little since it was showcased in the 1974 James Bond film The Man with the Golden Gun.

For decades, this was Macau's gaming scene -- monopolised by 88-year-old tycoon Stanley Ho -- until it opened to foreign competition in 2002.

A stream of Las Vegas-based gaming companies flooded into the former Portuguese colony, hoping to cash in on what promised to be a massive market of gambling-mad visitors from nearby Hong Kong and mainland China.

The newcomers built ostentatious casino hotels with thousands of rooms, dwarfing Macau's older venues. Money poured into the once sleepy city of half a million people and now gambling revenues have overtaken those in Las Vegas.

But the plan to transform Macau from Asia's seedy gambling den into a Vegas-style family entertainment hub has not matched its gaming success.

"It is the early stages of the whole entertainment offering in Macau," Davis Fong, director of the University of Macau's Institute for the Study of Commercial Gaming, told AFP.

"It's going to take some time for tourists and locals to accept it."

Lingering doubts about the idea re-ignited last month when Las Vegas Sands chairman Sheldon Adelson complained that ticket sales for the Cirque de Soleil show ZAIA at his Venetian hotel were "disappointing."

Adelson said Cirque de Soleil promised to "improve the show or replace it."

The world-renowned act, which usually plays to capacity crowds, was the linchpin in Macau's plan to become an entertainment and gaming hub.

The Montreal-based company disputes the accuracy of Adelson's comments, but said drawing a local Chinese audience to the show -- a mixture of dance and acrobatics set to music -- has been a challenge.

"ZAIA is the first and the only show of its kind in this unique market," spokeswoman Renee-Claude Menard said in an e-mail to AFP.

"There is no entertainment 'tradition' in Macau which makes the challenge even greater. It therefore requires very distinctive marketing approaches to ensure its success."

Menard said Cirque is making adjustments to the show, but "there has never been a question of replacing ZAIA."

By contrast, Cirque de Soleil has been a hit in Las Vegas.

Despite its label as America's Sin City, the Nevada desert metropolis offers a host of family-rated entertainment and top acts, including comedian Jerry Seinfeld, magician Criss Angel and singer Celine Dion. She finished a five-year nightly performance at the Caesars Palace in 2007.

Apart from attracting some local talent, Macau's sparse entertainment offerings include a few burlesque shows and a tacky harbourfront theme park.

A plan to build a version of the Playboy Mansion in Macau has reportedly been shelved while most casino operators remain conservative in their plans for new entertainment venues.

One hurdle is that Macau's 23-million annual visitors stay an average of 1.5 days, less than the average three to four night stay in Las Vegas.

"When someone spends three or four days in a place, they'll have a whole bunch of time to spend on other activities rather than just gambling," said Aaron Fischer, director of consumer and gaming research at brokerage CLSA.

"If you're only in Macau for one and a half days, most people are quite happy to spend that time gambling."

Even spending at the city's retail shops has fallen short of expectations.

"That is the easiest area to do well, but it hasn't," Fischer said.

It will take at least five or 10 years for the non-gaming business to reach an "acceptable level," if it happens at all, Fischer said.

Macau's success at the gambling tables is also its own worst enemy.

The city's government has worried aloud about social problems attached to a gambling economy, rising rent prices for local residents and youths dropping out of school to take casino jobs.

Meanwhile, alarmed at the amount of money that mainland Chinese were spending, Beijing clamped down last year by limiting the number of visits they could make to Macau.

Those restrictions have been relaxed, but are likely to return as Beijing moves to stem the city's runaway, gambling-driven, 29 percent annual growth, Fischer said.

In fact, the promise to turn Macau into an entertainment hub is largely aimed at placating Beijing and the city's government, rather than a hedge in case gaming revenues hit a rough patch, he added.

"It keeps the government happy," Fischer said.

"They won't close down Cirque de Soleil. The cost of the show is immaterial compared to the gambling revenues at The Venetian. It's a sideshow."

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