MACAU BUSINESS If the MOP180-billion mark is only reached in 2028 or
later years until 2032, the percentage of the additional non-gaming investment would be limited to 16 per cent, 12 per cent, 8 per cent, 4 per cent or 0 per cent respectively; this means if the gaming revenue only hits over MOP180 billion in 2032, the operators will not have to bolster their pledged non-gaming investments. The citywide gaming revenue reached MOP 292.46 billion
in 2019 prior to the Covid-19 pandemic, which has dampened the glitz of local casinos. The latest official figures show all the casinos in Macau raked in only MOP42.19 billion (US$5.25 billion) 2022, down by 51.4 per cent year-on-year. Despite all the pledges and projects announced by the
operators, Secretary for Administration and Justice André Cheong Weng Chon, who also headed the committee for the public tender of new gaming concessions, stressed in a press conference held on December 17 that no new land parcels will be granted to the six concessionaires. In the same press briefing, where chief representatives of the gaming companies introduced their plans for the coming decade, Mr Cheong acknowledged that during the past three-year pandemic, the six operators felt a considerable impact and underlined that the companies assumed their social responsibilities to guarantee the employment of local employees.
Lower returns expected Both the government and the operators have so far not divulged, for instance, details regarding the overall economic benefits these new non-gaming investments would bring. The administration only emphasised that it hopes these can “attract travellers from different places to Macau and prolong their length of stay.” As travellers from non- Greater China regions only accounted for less than 10 per cent of the total visitors’ arrivals to Macau and represented just 3.58 per cent of the city’s gross gaming revenue prior to the COVID-19 pandemic, the administration added that it is expected that the volume of international travellers would “at least double” at the end of these new 10-year concessions. “These projects will generate additional revenues directly – non-gaming revenue – and indirectly – incremental gaming spend from additional visitors and longer stay – and could be net positive to EBITDA,” brokerage JP Morgan said in a recent research note, adding the returns on these new investments would “much lower” than the existing gaming amenities.
A similar perspective is also shared by analysts at another
investment bank, Morgan Stanley. “Clarity is lacking on how operators are going to spend the required investment on non-gaming. Yet, many investment examples provided by Macau under the 11 non-gaming areas are opex in nature, which tends to have very low returns,” the analysts remarked in a recent report.
24 FEBRUARY 2023
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