Events
IAGA SUMMIT Macau 2018
Vitaly Umansky, Senior Research Analyst, Bernstein
WHAT’S HAPPENING IN MACAU?
Macau, the second-largest gaming market in the world (behind the US), generated over $33bn in gross gaming revenues (GGR) in 2017, and is the largest premium gaming market in the world, with $16bn in VIP GGR, over $9bn in "Premium Mass" GGR, and $8bn in "Base Mass" GGR. For Macau, "Te Ascent of the Masses" is largely about Chinese premium consumption - in fact, all Macau gaming spend can be called "premium" (not to be confused with commonly termed "Premium Mass").
Te future of Mass is supply-driven, particularly, the nature of that supply (more high end hotel rooms, greater non-gaming features and experiences). Te Macau gaming market has long-run growth potential that can continue with the supply growth, improved transportation and continued demand in premium consumption.
Te VIP segment, which makes up slightly below 50 per cent of Macau GGR (but less than a quarter of industry profits) should see long-term growth below that of Mass. Over the long run, the VIP model will continue to face structural headwinds from tightening regulations. Te VIP sector is highly volatile, with numerous drivers, and remains difficult to forecast. VIP is volatile as it is impacted by government policies, liquidity, macroeconomic conditions, f/x and player sentiment. Continued softening of the anti- corruption campaign would be very positive to the recovery of high-end gaming in Macau. However, anti-corruption activity may not be going away fully as we had anticipated following the latest party congress. Liquidity and real estate pricing have been key drivers of VIP play. Tese drivers have been showing signs of softening as the government looks to rein in runaway property prices and curtail the credit expansion cycle. Finally, capital outflows had been supportive of the VIP GGR rebound and have led to significant junket recapitalisation and a return of
more agents and players. However, China policy impediments on outflows create additional headwinds to overly robust VIP growth. For Macau, a slowing VIP environment, punctuated by volatility, is on the cards.
Catalysts continuing to materialise should support long-term Mass market growth. Te key driver will be premiumisation – overnight visitors, staying longer and spending more. Premium customers remain critical for long-term Macau growth, as wealthier customers spend more and visit more frequently – and the population of this demographic is increasing at faster rates. Continuing improvements in transportation and the opening and ramp up of new integrated casino resorts support long-term Mass
Vitaly Umansky is the Senior Research Analyst covering the global gaming industry with Bernstein. Vitaly spent the earlier part of his career in consulting and investment banking, first with Ernst & Young and PricewaterhouseCoopers, before moving to Merrill Lynch, where he was responsible for originating and executing financing and M&A transactions for private equity and corporate clients. He then moved to New Cotai Holdings in 2007 as the company’s Chief Financial Officer & Senior Vice President for Business Development, evaluating and developing casino, integrated resort & real estate assets in Macau, as well as greater Asia. In his last role before joining Bernstein, Vitaly was a Managing Director in a private equity firm focused on investment opportunities in Asian emerging markets. Vitaly holds an MBA from the Wharton School of Business and a BA in Economics from Trinity College.
Catalysts continuing to materialise should support long-term Mass market growth. The key driver will be premiumisation –overnight visitors, staying longer and spending more. Premium customers remain critical for long-term Macau growth, as wealthier customers spend more and visit more frequently – and the population of this demographic is increasing at faster rates.
growth (Premium Mass, in particular) – the execution of a supply driven market. Overnight visitors now account for over half of overall visitors to Macau and this ratio will continue to grow as overnight visitation outgrows day-trippers.
Te overnight growth rebound Macau has been experiencing since spring 2016 is partly due to increased hotel room availability and lower hotel room costs. Continued supply expansion (both casinos and non-gaming offerings, including hotel rooms) in Macau, and later in Hengqin, will help sustain overnight visitation growth trends. However, while non-gaming revenues will continue to grow, they will remain a small fraction of gaming revenues.
IAGA
The International Association of Gaming Advisors (IAGA) will hold its 37th annual International Gaming Summit May 14 - 16 at the Four Seasons Macao in Macau, China.
NEWSWIRE / INTERACTIVE /MARKET DATA P65
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 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150
