he mass market was the first to return to growth in the latter months of 2016 after a near threeyear decline, but the sustained performance of VIP this year has taken many observers by surprise. After strong growth in the first quarter, many had predicted a slowdown in the second half as year-onyear comparisons became less favourable. However, according to data from the Gaming Inspection and Coordination Bureau (DICJ), there was a 35 percent surge in revenue from VIP baccarat in Q3 to MOP38.7 billion ($4.8 billion), making up almost 58 percent of all gaming revenue in the period. Mass drags In comparison, the mass sector posted single-digit growth of 7.4 percent to $28.3 billion. The number of gaming tables grew from 6,304 to 6,449, while the number of slot machines rose from 15,769 to 16,310. The weaker mass numbers in Q3 relate in part to the impact of Typhoon Hato, which caused widespread devastation in August and which had a greater impact on mass-focused tour groups than the VIP market. However, it also demonstrates that Macau and its luxury resorts are still slanted towards high spenders.
GREATER CHINA 7
Although analysts expect that will eventually change with the improvements in regional infrastructure and the addition of new hotels rooms as the neighbouring island of Hengqin is built out, the 2017 performance shows it’s not there yet. The government’s tourism master plan for the next 15 years, released in September, targets a doubling in non-gaming spending to between $12 to $14 billion, with visitor arrivals to hit between 38 million and 40 million. Hotel supply is expected to increase 37.9 percent from 2016 to 2025, reaching 51,900. Typhoon Hato, which killed ten people, also highlighted the sorry state of Macau’s existing infrastructure despite its position in the top five globally in terms of gross domestic product per capita. The category 10 storm left more than half of the population without power and many without water for days as the main water supply facility was flooded. Operators rallied to help the local community with pledges of financial support and physical assistance to clean up the mess, while People’s Liberation Army soldiers left their barracks for the first time since the handover to join the recovery efforts. Legislators are now facing pressure to improve facilities and push forward with long-delayed infrastructure plans.
After a series of new IR openings over the past few years, it now appears 2017 will not see any major development open its doors, with two projects delayed until next year. MGM China was scheduled to debut its jewellry box-styled resort in Q4, though pushed that back until January next year due to widespread damage to the site caused by Hato. Budget boost MGM also announced an increase in project costs from HK$26 billion to approximately HK$27 billion (US$3.3 billion), excluding land and capitalized interest. Morgan Stanley revised down its 2017-19 EBITDA estimates for the operator by about 2-4 percent as a result of the delay to the project, which will double MGM’s capacity in Macau. Luxury property, The 13 Holdings, which will be one of the world’s most expensive resorts, missed a July opening date and now says it’s pushing for early next year. The company is seeking to raise around HK$1.7 billion (US$217.8 million) through a rights issue and a placing of loan notes to fund the development and is now targeting March for its debut. The last of the mega projects planned for Cotai -- that of SJM Holdings -- has been hit by multiple problems. The death of a
Asia Gaming Briefings | November 2017
Published on Nov 10, 2017