Analysts: GGR will rise 7 percent in ’17
The signs are largely positive for Macau as it heads into 2017.
Gaming revenue has risen year-on-year for five months in a row, when a 26-month decline finally came to an end. In December, gross gaming revenues were up 8 percent to 19.8 billion patacas (US$2.48 billion), according to data from Macau’s Gaming Inspection and Coordination Bureau; November saw a 14.4 percent increase in GGR, reported Bloomberg News.
Analysts expect a 7 percent increase in gaming revenues for 2017 and EBITDA growth of 12 percent, with mass market players leading the charge.
According to the Wall Street Journal, Macau is “back on a winning streak, but this one is less high stakes,” with a greater emphasis on mass gaming. The lower-stakes mass segment now makes up almost half of gaming revenues (two years ago, mass players accounted for about a third of GGR). During the same time, high-roller revenues, which once ruled in Macau, have been cut in half, largely as a result of President Xi Jinping’s crackdown on corruption and money laundering. Xi ordered the city to develop a less gaming-centric economy, and casino operators have complied to a certain extent, with more non-gaming attractions like the Batman virtual reality ride and Ferris wheel at Melco Crown’s Studio City resort, or the half-sized replica of the Eiffel Tower at Las Vegas Sands’ new Parisian Macao resort on the Cotai Strip.
Bloomberg reports that Macau’s efforts “to reinvent itself with a Hollywood-themed resort” with more family-friendly attractions—especially at the city’s new Cotai resorts—show that the surge will come from leisure players rather than VIPs.
“There are definitely more reasons to come to Macau now versus two years ago, and that’s the key reason overnight visitation is growing faster than total visitation,” said Nomura Holdings Inc. analyst Richard Huang. As more casinos open in Macau in the coming years, “we expect that to continue drive growth in the mass gaming segment,” he said.
“Without a doubt over past several months, Macau has felt busier than it has in a couple years,” agreed Union Gaming analyst Grant Govertsen. But he pointed out that non-gaming still accounts for just 6 percent of overall revenues in the gaming destination, versus 62 percent in Las Vegas.
“Does the fact that Macau has an Eiffel Tower now brings extra people to the market? Yes, but their main activity here will still be gaming,” said Govertsen.
Meanwhile, analysts from Nomura say there could actually be a down side to a spike in VIP revenues.
“While we don’t yet have the December breakdown of VIP versus mass revenues, we believe the recent growth spurt in Macau VIP revenues to over 20 percent in November—which was four times greater than mass growth for the month—is not sustainable and that it could lead to negative policy responses from Beijing if it were to persist.”
