A banner December helped boost Macau gross gaming revenue to MOP360.8 billion in 2013 (US$45.1 billion), an 18.6 percent increase over 2012.
The total surpasses the consensus forecasts of analysts, which tended to range between 14 and 15 percent, and is likely to equate to more than seven times the GGR generated on the Las Vegas Strip once that is calculated. Strip revenues stood at $5.8 billion through November.
The results are a new record for the Chinese casino enclave, beating the US$38 billion record set in 2012 with the help of a December that was the second-best month in the industry’s history, up 18.5 percent year on year to MOP33.5 billion ($4.2 billion).
Union Gaming Research Macau is forecasting 14 percent revenue growth across the board for 2014, based on a projected 10 percent increase in VIP revenue and 22 percent in mass market and slots.
“Based on numerous conversations we’ve had with casino operators over the past few weeks we find no reason to alter our bullish stance,” the investment firm said in a note to clients.
Wells Fargo analyst Cameron McKnight is projecting a more conservative 10 percent on the view that a slowdown in growth in credit on the mainland could begin to make itself felt on returns in Macau by the middle of the year. Similarly, he expects a relatively modest 5 percent growth in visitation, but says this will have less of an impact as the city focuses more on attracting higher-spending, longer-staying tourists.
Macau hosted more than 17 million visitors from China in the first 11 months of 2013, with November’s 1.56 million the most for any month going back at least six years, according to data compiled by Bloomberg. This is significant looking ahead to the market’s prospects in the new year, says Union Gaming’s Grant Govertsen. “In absolute terms, it’s going to be magnificent growth because of the improved rail connection and infrastructure, as well as the addition of the Chimelong theme park on neighboring Hengqin Island.”
Chimelong’s principal attractions—Chimelong Hengqin Hotel, the largest in China with 1,888 rooms, and Chimelong Ocean Kingdom—will be up and running by the end of this month, joining the resort’s Circus Town, which opened last fall and is now running regular shows. The resort is expecting 100,000 visitors during Chinese New Year, which should be easily achieved if the first China International Circus Festival, held at Circus Town from November 20 to 1 December, is any indication. The show sold out every one of its 2,700 nightly seats.
“We estimate the first full year of visitation to the theme park has the potential to range between 1 million to 2 million,” said UGRM. “Over the longer term, when the theme park develops its additional phases (these include nine theme parks, 12 hotels, three golf courses, and more) we believe it could ultimately attract between 10 million and 15 million visitors annually.”
The revenue picture brightens as well in light of ongoing improvements in rail and air transport.
Guangzhou-Zhuhai Intercity Railway recorded more than 12 million passengers in 2013, of whom more than 5 million passed through the Gongbei station bordering Macau. The five stations in Zhuhai, including Gongbei, handled 8.9 million passengers in all, and the line’s operating company recently announced that service will be increased to no less than 38 trains daily from the current 35, with up to 44 running on peak days. Operating hours also are being expanded.
The line’s success—it’s handling more than 33,000 passengers a day on average—is a key to Macau’s longer term prospects by virtue of its connection with the Guangzhou-Beijing High Speed Railway network. The network runs through major metropolitan areas such as Wuhan in Hubei province and Changsha in Hunan with their combined population of 17.3 million and will prove instrumental in extending Macau’s reach deeper into the mainland. Through November, visitation to the city from Hubei was up 14 percent year on year to more than 506,000. More than 587,000 made the trip from Hunan, an increase of 10 percent.
If Zhuhai’s Jinwan Airport gets up to capacity the impact could even be greater. Nine new routes were introduced over the last year and service was expanded on five others. The facility is handling an average of 85 flights a day to 32 destinations, and total passenger traffic was up almost 39 percent in 2013 to 2.9 million. This is expected to grow to 3 million this year—and it’s “the least utilized major airport in the Pearl River Delta,” according to UGRM, and therefore “represents a potentially significant driver of incremental visitation to Macau given that it is the closest mainland airport to Macau and is currently operating well under its theoretical capacity.”
December traffic through Macau International Airport, which accounts for about 6 percent of the city’s visitation, was up 14 percent over December 2012 to 450,000. It was the 29th consecutive month of traffic growth. In all, more than 5 million passengers came through the facility last year, 11 percent more than in 2012, with Southeast Asia (+39 percent), mainland China (+34 percent) and Taiwan (+27 percent) accounting for most of the increase.
