Can Avatar-like Theme Park save Macau?

For over a year and a half, Macau gaming revenue has continued to sink. But casino magnate Lui Che-Woo is banking on an “Avatar-like theme park” to reverse both his and Macau’s fortunes.

The Galaxy Entertainment Group Ltd. chairman is pouring HK$86 billion ($11 billion) into the project, which he says will offer “something special and high- tech” just like the movie “Avatar.”

Lui has compared his theme park to Walt Disney Co.’s $5.5 billion Shanghai park, which will open in June. However, he also notes that his “park will be smaller but unique.”

As Skift notes, Lui originally made his fortune in the construction business before turning to gaming. So it’s easy to see how he can preside over such a large-scale, non-gaming operation.

“Nowadays, you already see that all these theme parks all have different special ideas,” said Lui. “So we’re thinking of how to compete against them.”

Ever since Chinese President Xi Jinping ordered Macau to diversify its offerings away from gambling two years ago, casino owners have been busy thinking of ways to attract general tourists. And CLSA Ltd. analyst Aaron Fischer believes that Lui’s theme park idea is among the best so far.

“Theme parks are a great idea and Macau is desperate for more non-gaming attractions,” Fischer said. “These investments are in line with government demands so this will further strength relations and reduce the risk of the license not being renewed.”

But Fischer was quick to note that the financial return on theme parks is pretty low. So he thinks that Galaxy should also look to add another 6,000 hotel rooms and convention space to improve its weekday occupancy.

Macau casinos used to rely on heavy business from high stakes players brought over by junkets (gambling recruiters). And this was a lucrative business for over a decade. However, the Chinese government is in the midst of a crackdown to stop money laundering and government corruption. In turn, this has scared off many high rollers who don’t want to hassle with stricter government sanctions.

Macau gaming revenue has felt the brunt of these changes. So gaming companies are quickly working to diversify and draw a wider range of visitors. In the end, Macau could become more like Las Vegas, which was forced to diversify more during the Great Recession of 2008.