Galaxy Phases 3, 4 to Focus on Non-Gaming

Galaxy Macau’s Phase 3 and Phase 4 expansions on the Cotai Strip will emphasize non-gaming attractions with entertainment, family-friendly amenities and convention and meeting facilities at the top of the list.

Construction to begin in the second quarter

Galaxy Entertainment’s Phases 3 and 4 on Macau’s Cotai Strip, set to begin construction in the second quarter of the year, will focus on non-gaming amenities, “with virtually all floor areas” targeting mainstream tourists, families and business travelers, said Galaxy Chairman Lui Che Woo.

“The group is positive on the longer-term outlook for Macau,” said Woo, “and we are hopeful that the recent signs of stabilization will see successful transition into a sustainable recovery. We do acknowledge that in the shorter term we face increased regional competition and a tightening regulatory environment.”

The total investment for the upcoming expansions will be “definitely no less than” HKD43 billion (US$5.54 billion), Deputy Chairman Francis Lui Yiu Tung said last month. He confirmed that the venues would work to bring in more family visitors and young adults, reported GGRAsia.

Galaxy is alone in towing the Chinese government line and diversifying the historically gaming-centric economy, reports the Macau Daily Times.At the Macau Integrated Tourism & Leisure and Corporate Social Responsibility Forum held last month, the Big 6 concessionaires highlighted their contributions in food and beverage, meetings and conventions and entertainment facilities.

Sands China noted that it brought the integrated resort model to Macau and since then has held 700 MICE events attracting 1 million attendees. SJM said it regularly underwrites arts and sports activities and added that its upcoming resort, the Grand Lisboa Palace in Cotai, will devote 95 percent of its premises to non-gaming purposes. Galaxy Entertainment Group said 60 percent of the companies it supports are local SMEs.

MGM China CEO Grant Bowie said the U.S.-based company’s upcoming MGM Cotai will be home to a number of entertainment options. “All of those things—a resident show, headliner opportunities, a DJ nightclub—we have an opportunity here to do something very different,” he said. The property is due to open in the second half of 2017.

The forum was organized by the Macau Polytechnic Institute and supported by the Liaison Office of the People’s Republic of China to support economic diversification, the publication reported.

“Macau’s gaming revenues have experienced cycles of exponential growth followed by considerable adjustments and finally managed to achieve a steady recovery in recent months,” said IPM President Lei Heong Iok at the forum. “The government, the enterprises and the whole community are now all aspiring to further strengthen Macau’s non-gambling sectors, with a view to attracting more stratified visitors, offering them more choices, so as to extend their stay and spending in Macau.”

The ultimate goal, he said, is to “enhance the whole industry’s resilience against the impact of all possible adverse factors and to maintain Macau’s economic rigor.”

Analysts from Sanford C. Bernstein say Macau is on the right track as it continues to distance itself from the historic 26-month decline that finally began to ease last summer. The brokerage says March GGR could grow by 13 percent to 14 percent for the eighth straight month of positive returns.

“Compared with February’s ADR of MOP821 million (US$102.6 million), the month-to-date ADR of MOP673 million was down 18 percent,” said Bernstein analysts Vitaly Umansky, Zhen Gong and Yang Xie in a note late last month. “VIP remained strong and luck factor during last week was at normal level according to our channel checks.”

“According to checks and estimates, Macau GGR is trending between +12 percent and +16 percent,” said David Bain of Aegis Capital Corp. “While this is in line with our +13 percent to +16 percent estimate range, it is above consensus calling for a high single-digit year-on-year March Macau market gain.”