MACAU BUSINESS
investors can predict it better. “And, yes, mass- market growth will help high reported hotel room occupancy and high check-in rates,” he says.
Gaming Market Advisors principal Andrew Klebanow notes “there is a great deal of competition for VIP play, and that competition will continue to grow.” “Cambodia, Vietnam and the Philippines will all compete with Macau for a portion of the junket market, and they may do so by offering more generous commissions.” Commissions here are capped at 1.25
percent of rolling chip volume. Over the horizon
“There are also a finite amount of Chinese millionaires who have a high propensity to gamble, and we are now starting to see the limits of that market,” the veteran industry executive turned consultant says. “Mass-market growth represents the greatest opportunity for Macau gaming. There are still huge swaths of the Chinese population that have not experienced the gaming and entertainment experience in Macau. As the high-speed rail network becomes operational, the mass market will have greater access to Macau.” HSBC’s Mr Monaghan divides the Chinese
market into regions. He estimates that Guangdong, the provinces immediately surrounding it and Hong Kong together account for 74 percent of gross gaming revenue here. The rest of the mainland accounts for only 14 percent of gross gaming revenue and 7 percent of visitors. “While market penetration in mass gaming is high within Macau’s core market, penetration across other China regions remains inherently low,” Mr Monaghan says. “We believe Macau casino resorts are enhancing their marketing programmes, targeting the mass market and making better use of travel groups throughout China.”
Mr Klebanow says: “More significant is the
potential growth of the premium mass market. These are people who have the wherewithal to gamble at high levels but do not use or need a junket operator.” The shift toward mass-market play neatly fits with the calls by the governments here and in Beijing for diversification of the economy. “Indeed, in the past two years, the government’s position to urge the casino operators to develop more non-gaming facilities is a signal for supporting the mass-market growth,” the University of Macau’s Mr Siu says. “And, of course, this helps diversification.
Mass-market players may not just focus on gambling, but on non-gaming activities.”
More pie While Cirque du Soleil’s “Zaia” show and
the Playboy Club at the Venetian Macao closed early this year, the number of non- gaming attractions for the mass market has increased in Cotai during the past two years. These attractions include “The House of
Dancing Water” show and Club Cubic at City of Dreams, the cineplex and skytop wave pool at Galaxy Macau, and more retail offering, restaurants and bars in the Cotai resorts run by Galaxy Entertainment, Melco Crown and Sands China. “Without a doubt there is high degree of
correlation between the number of mass- market customers and the various non-gaming revenue segments,” Mr Govertsen says. “These customers have to eat, they have to sleep, and they also might want to be entertained. Quite simply, the greater the number of visitors to Macau, the greater the non-gaming revenue pie will grow. That said, it will always represent just a tiny fraction of the total casino resort revenue mix, which is a function of gaming revenues being so large.” “The successful development of a large
leisure and tourism market is an essential component to support the shift in the Chinese economy to be more focused on driving domestic consumption,” Galaxy Entertainment’s Mr Drake says. “The growth of [the] mass market in tourism,
leisure and travel will continue to assist Macau in diversifying its economy and continue its ascension into a global resort destination. The best is yet to come.”
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