More overnighters spending more
Macau expects to grow its number of annual visitors from 31 million in 2016 to 40 million by 2020, according to Inside Asian Gaming. That surge, driven by mass-market visitors, will increase the mass market compound annual growth rate by around 11 percent in the same period.
The predictions come from a new report, “Macau Gaming: The Ascent of the Masses,” from brokerage Sanford C Bernstein.
“The future growth driver for the Macau gaming industry will be mass, driven by increasing overnight visitation and increasing average visitor spend,” the Bernstein analysts wrote. “Mass has long-term growth potential that can continue with the growth in supply that is coming to Cotai.”
Bernstein noted that 20.5 million Mainland Chinese visited the territory in 2016, and that demographic will remain important for Macau. However, only around half that number were unique visitors, the report added. Continued growth will turn on increased overnight visitation and more spending by visitors on both gaming and non-gaming attractions.
“Increasing average spend is achievable as longer stays improve total spend per visit (for both gaming and non-gaming),” Bernstein analysts Vitaly Umansky, Zhen Gong and Yang Xie said. “The new supply of hotel rooms and offerings should drive Macau’s long-term growth in base mass and low-tier premium.”
The team said Macau is shifting “from a high-rolling VIP-focused market to a mass-focused market.” And despite the recent spike in VIP play, it expects the high-roller segment to “continue to face structural headwinds from a tightening regulatory environment in Macau and a continued focus on capital outflows in Mainland China.
“While VIP shall never likely return to its historical glory, mass has long-term growth potential that can continue with the growth in supply that is coming to Cotai,” said the analysts.
Macao Magazine reports that the local economy is expected to grow at an average real rate of 7.8 percent for this year and next—10.3 percent in 2017 and 5.3 percent in 2018—according to the latest Economist Intelligence Unit report.
In other positive news, brokerage JP Morgan Securities Asia Pacific said in a note in March that the impact of a smoking ban on GGR should be “manageable” for casino operators. JP Morgan says the new rules will have an impact equal to approximately 5 percent of GGR in 2019, when the city’s casinos must implement stricter smoking lounge standards.
