Dismal numbers for the month so far
Great fanfare surrounded the opening of Melco Crown Entertainment’s Studio City resort on Macau’s Cotai Strip. The city hoped its beleaguered gaming industry would see a lift in business with the grand opening, but it hasn’t happened, according to Daiwa Securities Group—at least not yet.
Business at Macau’s casinos “continues to soften,” the firm said in a note, as the jurisdiction marks its 17th straight month of decline.
Last week Daiwa said Macau’s tables-only GGR for the first week of November was HKD3.8 billion (US$490 million), a year-on-year decline of 38.5 percent, despite the star-studded opening of Studio City. Or, as Japanese brokerage Nomura said, “In our view, Macau (especially VIP gaming) is not out of the woods yet.”
So far this month, reported Bloomberg News,Macau casino shares tumbled in Hong Kong after Wells Fargo cut its forecast for November GGR. Average daily revenue was 525 million patacas ($65.8 million) in the first week of the month, down 36 percent year-on-year. Wells Fargo analyst Cameron McKnight trimmed his revenue estimate and expects a drop of as much as 34 percent, 6 percent more than he originally forecast. Bloomberg analysts are calling for a 32 percent decline.
Sanford Bernstein took a longer and more optimistic view. “Over the longer term, income growth of Chinese families will drive Macau’s gaming revenue growth,” the firm wrote. “The number of Chinese households with annual disposable income of over US$15,000 will be more than doubled between now and 2025—an addressable market of over 450 million people” that may shore up the patron base in the world’s No. 1 gaming destination.
As MGM Resorts International topped off its upcoming resort on the Cotai Strip, Chairman and CEO Jim Murren sounded an upbeat note about the future of gaming in Macau. MGM Cotai is built to house 500 table games, and if it doesn’t get that many, “We would adjust to that. We would make the best of the situation. The focus on tables is, I know, very high but misses the broader point.
“Are you delivering incremental gaming activity and therefore revenue to the government?” he asked in an interview with the Macau Daily Times. “That’s what the tables and the slot machines are intended to do. And how do you drive traffic into your resort? If you deliver on the entertainment, on the room product, on the food and beverage offerings, then you will get higher productivity on the tables and therefore more gaming revenue.”
Meanwhile, the Macau government continues its midterm review of the city’s gaming industry and its six concessionaires, says Secretary for Economy and Finance Lionel Leong Vai Tac. The results are due in this year, but most likely will not be announced until early 2016. Macau Chief Executive Fernando Chui Sai On says the casino operators will be judged on “development of the gaming industry; its economic impact on Macau; its impact on small- and medium-sized enterprises; its impact on Macau’s society; the relationship between the gaming and non-gaming sectors; whether gaming operators are complying with the terms in their contracts; the operations of gaming companies; and whether gaming operators are fulfilling their social responsibilities.”
Those who score high in those categories are expected to have their concessions renewed after the current terms expire, between 2020 and 2022.
In other Macau news, the international watchdog group Tax Justice Network says it considers Macau the 11th most financially secretive place among 92 economies it surveyed, Macau Business reported. The group measures factors like banking secrecy, corporate transparency and tax administration.
