Market inching toward recovery
When the Las Vegas Sands Corp.’s Parisian Macao opened September 13, it was accompanied by a party worthy of a $2.7 billion Paris-themed gaming resort in the world’s No. 1 casino town.
The Parisian, with its half-scale replica of the Eiffel Tower, is Sands Chairman and CEO Sheldon Adelson’s fifth property in Macau. The 83-year-old billionaire was on hand to celebrate the big event, accompanied by Rob Goldstein, president and COO of Las Vegas Sands, and Wilfred Wong, president of Sands China Ltd. They spoke to some 800 reporters who assembled for the event.
“This is the only place in the world that you can go, under one roof, to 13,000 rooms and suites, more than 900 retail shops, two and a half million square feet of MICE space and countless restaurants,” Adelson crowed. Those amenities—including 3,000 new rooms at the Parisian—are considered vital to new resorts as the market focuses more and more on non-gaming attractions.
David Williamson, head of AM Capital in Hong Kong, told the Las Vegas Review-Journal the transition from VIP gaming to mass gaming and non-gaming revenues will last “till 2030. After 2030, we expect the industry to enter a maturity stage, which will be characterized by a steady but low-growth and high-dividend payout.”
The jurisdiction has been in the grip of a 26-month downturn. When the numbers finally inched up 1 percent in August, it was cause for rejoicing, but many observers caution the city is not in full-blown recovery mode—yet.
“We conclude that Macau is now at the start of a mass-led GGR recovery. Importantly, both base mass and premium mass are growing again,” said Karen Tang, analyst at Deutsche Bank in Hong Kong.
Adelson himself declared he is “optimistic that we have hit the bottom.
“Based upon the pre-bookings we have, based upon the convention bookings we have, I think we have essentially hit the bottom,” said Adelson. “We’ve gone down gradually and I think we’ll go up gradually. Macau still has very good days to come. I can’t predict what the percentage of growth will be but I’m optimistic about the future.”
Goldstein also was upbeat and said Macau is still “the No. 1 market in the world by a multiple of five or six” despite the recent downturn.
A report in Barron’s described the opening as “dazzling.” Though the Parisian hoped to open with 410 table games and 1,600 slot machines, like other resorts on the Cotai Strip it was granted only 100 gaming tables for the open, with 50 more approved for 2017, in keeping with a government cap on new-to-market tables. The company was allowed to shift tables from some of its other properties to make up the deficit.
The Parisian also has a 1,200-seat theater where “Thriller Live,” a production show based on the music of Michael Jackson, opens at the end of the month.
Adelson said if he builds any more resorts in Macau, they will likely be smaller than the Parisian.“We have some ideas for additional work here in Macau but not any major integrated resorts like the Parisian,” Adelson told GGRAsia. “We may do something themed around London or something from the States like San Francisco that has a lot of iconic features. We wouldn’t build a thematic property if we didn’t feel this would truly attract people in proportionately higher numbers than the non-thematic properties.”
Analyst Grant Govertsen of Union Gaming said the brokerage has “fairly high expectations for Parisian to be the most likely property to grow the market. Sands China does a better job than the peers in delivering what mass-market consumers wants, and Parisian should hit a sweet spot given the Chinese affinity for Europe in general, and Paris specifically.”
But in a roundup in Forbes magazine points to the new $4.2 billion Wynn Palace as the biggest driver of revenues on the Strip, though it is explicitly targeting VIPs.
Meanwhile, Galaxy Entertainment Group Chairman says it’s not time to pop the corks yet. “While Macau’s gambling industry has hit the bottom, it’s still too early to call it a recovery,” Lui said. “Give me two more years to see. It takes time to gradually attract more mass-market customers.”
