SJM Holdings Chief Executive Ambrose So has offered a downbeat assessment of the Macau market for the months ahead, saying he expects VIP revenue declines to continue into next year.
“The prospect of the VIP market is gloomy,” said the head of the city’s largest operator by number of properties. “If you ask me now, I’m bearish towards VIP market for the next six months. I don’t know how to read the future beyond that.”
He is forecasting revenue market-wide to be flat to slightly down this year to be followed by “high single-digit” growth in 2015.
The largest casino market in the world is in the midst of an unprecedented revenue slump characterized by five straight months of year-on-year declines, driven mainly by a sharp fall-off in VIP play, which accounts for most the casinos’ annual take. Analysts and observers blame slowing economic growth in mainland China and the Communist government’s widespread campaign against corruption for making high rollers scarce..
“The government will probably give a review of the campaign next year” during the annual meetings for the national legislature and top political advisory body, So said. “If the campaign isn’t going to expand further in any sense, things may start to improve. Impact from the campaign is mainly psychological.”
Wells Fargo and Sterne Agee both recently released reports projecting that November will be the sixth straight month of revenue declines. Wells Fargo analyst Cameron McKnight said checks with casinos and suppliers indicate the drop come in at minus-16-18 percent versus November 2013. Sterne Agee’s David Bain expects a 19 percent drop.
Revenue has grown by 2.3 percent year to date and may fall 0.6 percent in 2014, according to a median estimate of nine analysts surveyed by Bloomberg News. The market may rebound to a 2 percent growth next year, according to a median estimate of 12 analysts surveyed.
The market recorded its slowest annual growth in casino revenue in 2009 with a 9.7 percent gain, and it hasn’t seen a yearly decline since records started in 2002.
