Macau’s Gaming Inspection and Coordination Bureau has posted year-on-year gross gaming figures for the month of July. To no one’s surprise, the gaming industry marked its 14th straight month of decline, dropping 34.5 percent to MOP18.62 billion (US$2.33 billion). The accumulated GGR for the past seven months is down 36.7 percent, to MOP140.26 billion.
Bernstein Research analyst Vitaly Umansky said the news from the world’s No.1 gaming destination is heartening, despite the decline. “While July is typically expected to have some seasonality uptick from June, we believe that this month has shown an important sign of stabilization and improvement as the market looks to bottom out,” Umansky said.
According to the Asia Gaming Brief, Sands China gained the most market share and SJM lost the most. “We continue to favor Sands China on the back of its critical mass garnered from the interconnected casino resorts in Cotai, as well as its operational and marketing acumen to weather the challenges in the market,” said Umansky.
A report in Bloomberg News cited more relaxed visa rules as one reason for the improved outlook. Starting July 1, the local government allowed Mainland Chinese travelers to visit more often and stay longer.
“We haven’t seen a firm stabilization yet,” said Bloomberg Intelligence analyst Tim Craighead. “The second half of the year has a good chance to see a revenue inflection, with new resorts coming on stream and Chinese stimulus measures hopefully supporting consumer activities.”
The new resorts on Macau’s Cotai Strip were conceived before the historic slump. They will add supply in terms of gaming, but also will hopefully add a diversity of attractions to bring in more mass-market players. Galaxy Entertainment opened two new casino resorts in May. Melco Crown Entertainment Ltd. will soon open its $3.2 billion Hollywood-themed Studio City resort.
Also in the pipeline: Steve Wynn’s Wynn Palace project, due to open next March; and Sands China’s Parisian Macao, which will open in July 2016.
According to the International Business Times, Macau looks to undergo a Vegas-style transition from casino town to a broad-based destination with nongaming amenities— entertainment, dining, shopping—that will attract middle-market tourists and even families. Galaxy’s Phase II and Broadway at Galaxy resorts, for example, feature the world’s biggest wave pool and a rooftop aquatic ride, plus three hotels including an all-suite Ritz-Carlton, the largest JW Marriott in Asia and the Broadway hotel. Studio City will offer a figure eight-shaped Ferris wheel, a magic theater, a jungle river and a virtual reality Batman rides, among other attractions.
But amusement rides and kiddie games will not be enough on their own to change the identity of the former Portuguese colony. “I think Macau still isn’t really seen as a holiday destination for families,” CLSA analyst Marcus Liu told Bloomberg. “Macau is very much an adult-orientated environment now, largely because the only thing really to do in Macau now is gamble. I think when they bring out non-gaming amenities, they will have to rethink their strategy and advertising, to try and appeal to a more diverse demographic.”
Operators in the jurisdiction continue to hope for a softening of the government’s anti-smoking policy, which could further hurt the casino industry in Macau. Investment analysts predict that a full smoking ban in the city’s casinos could cut another 10 percent from mass market gaming revenue and as much as 15 percent from VIP revenue.
