MACAU BUSINESS
promote the economic diversification that the governments here and in Beijing say they want. “The key to the mass market’s continued
growth is developing differentiated world-class resorts supported by continued improvements to infrastructure, which makes Macau more convenient to visit,” Galaxy Entertainment Group Ltd’s chief financial officer, Robert Drake, tells Macau Business. “This would include us offering a diverse
array of non-gaming amenities that attracts new visitation, drives repeat visitation and increases the length of stay.” Galaxy Entertainment announced in April that Galaxy Macau had begun building its second phase. The HK$16 billion (US$2.1 billion) project will add 1,300 hotel rooms to the Cotai resort and double its number of shops.
Tied to GDP “It’s chicken and egg,” HSBC regional gaming
analyst Sean Monaghan says of mass-market growth and non-gaming attractions. “You have to build them to get the people. The more you build, the more diverse the patrons and the more viable the non-gaming amenities.” Mr Monaghan is the principal author of an HSBC report which forecasts that this year
20 NOVEMBER 2012
mass-market gaming revenue will grow by nearly 30 percent and VIP gaming revenue by 5 percent, and that next year mass-market revenue will grow by 25 percent and VIP revenue by 7 percent. The report says VIP gaming revenue will track
growth in mainland gross domestic product in the long run, while mass-market gaming revenue has the potential to grow at twice the rate of mainland GDP. “The resilience of mass gaming is changing
the profitability of casinos and buffering the weakness in VIP,” Mr Monaghan says. “On a long-term basis, we forecast mass gaming will grow to 50 percent of Macau gross gaming revenue in 2020 from 27 percent in 2011. This change in market mix is expected to drive margins, earnings and valuations.” “Obviously no casino is going to turn away VIP business. However, we think [the] mass market is a much better customer,” Mr Govertsen of Union Gaming says. “Not only is the mass-market customer more
profitable, there is less associated volatility and there is more visibility. They are more predictable in their visitation patterns than a VIP player.”
Percentage game
Melco Crown Entertainment Ltd told Macau
Business in a written statement it has been “focusing on its mass-market strategy, which is believed to provide a more stable, loyal and profitable customer base for the foreseeable future.”
Melco Crown says growth in mass-market
revenue at City of Dreams, its flagship resort in Cotai, is running ahead of market trends despite the opening of neighbouring Sands Cotai Central. Melco Crown has even reallocated tables from the VIP market to the mass market to meet demand. “Two-thirds of EBITDA [earnings before
interest, taxes, depreciation and amortisation] at City of Dreams is generated by non-VIP sources, mostly mass-market gaming,” it says. Melco Crown’s Studio City resort, now under construction in Cotai, is also intended mainly for the mass market. “That means a market-wide shift towards mass-market plays to our core strength as a company,” the gaming operator says.
“Mass-market growth helps to ensure
sustainable growth through revenue diversification,” says University of Macau gaming specialist Ricardo Siu Chi Sen. He forecasts mass-market growth may be less affected by unexpected policy changes so
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70