Economy, smoking laws hurting Macau
Global brokerage Maybank Kim Eng says Singapore’s gaming market will see a modest bump in VIP gross gaming revenues this year, besting the high-roller segment in Macau. According to GGRAsia, Maybank has forecast a 5 percent increase in GGR for the segment in 2019 and a 5 percent boost in 2020 as well.
A January 14 note from analyst Yin Shao Yang anticipated that a softer Chinese economy and Macau’s stricter smoking laws will combine to create a “weak outlook” for GGR in Macau’s VIP market segment. “Given the historical relationship between Macau VIP GGR and Singapore VIP volume, investors are understandably concerned that the Singapore VIP market will decelerate as well,” the Maybank note said, adding that it remains “more sanguine and not as pessimistic” about VIP GGR in Singapore.
The lack of a smoking ban at Singapore’s two casinos—Marina Bay Sands and Resorts World Sentosa—will help to keep that market more buoyant, the bank said, along with the casinos’ ability to ease their “tight credit policies to VIPs.”
Japanese brokerage Nomura announced “consensus expectations” for Macau of “7.5 percent VIP compression in the first half of 2019 and up low single digits” in the second half.
On January 1, new rules took effect in Macau that eliminate the last bastion of unlimited smoking in the city’s casinos, at the VIP tables. In December, brokerage Sanford C. Bernstein said the new smoking rules will likely be “a headwind for the industry.”
Also of note to Maybank are plans by both the Las Vegas Sands Corp. and Genting, the respective operators of Marina Bay Sands and Resorts World Sentosa, to expand and improve the properties.
“Las Vegas Sands has repeatedly stated that it wishes to grow Marina Bay Sands hotel room inventory from 2,561 currently. Genting Singapore has also repeatedly stated that it intends to invest SGD1 billion (US$739.4 million) over three to four years to rejuvenate and expand Resorts World Sentosa,” the note said.
“In the first half of 2019, Genting Singapore is expected to announce its Resorts World Sentosa rejuvenation and expansion plan. By extension, we also gather that Las Vegas Sands will announce its Marina Bay Sands expansion plan then. Details are lacking at this point, but we believe that their plans involve more hotel rooms and new tourism attractions to complement their existing casinos.”
