After losing their positive stance in 2014 and struggling for three years now to stand up on their feet, Macau finally announces with pride their positive revenue results at the beginning of 2018.
Macau’s Gaming Inspection and Coordination Bureau posted some healthy figures in 2017, showing 19% of revenue increase bringing them up to $33.31 billion in 2017 only.
We believe GGR will continue to increase at a rate above one single digit and that full-year 2018 GGR will be better than last year’s,” Lionel Leong, Macau Secretary for Economy and Finance stated.
Looking at the entire year as a whole, operators like Sands China Ltd, Wynn Macau Ltd, Galaxy Entertainment Group Ltd, Melco Resorts & Entertainment Ltd and so on that own casinos on the Cotai strip, have shown an increase of winnings.
December alone is a completely different story. Gaming receipts increased for nearly 15% bringing them up to $3.7 billion. However, the finale of the year was expected to be bigger and better than it actually was. “The VIP hold rate during the month is slightly below normal. This month, both Mass and VIP are roughly flat month to month.”
Deutsche Bank Securities Inc. states that, now, as Macau entered their positive phase; their GGR is expected to grow by 11.3% during 2018 and the EBITDA to grow by nearly 15%. This is all expected along with the expectations of growth and following their positive trajectory. However, Macau’s high-roller market is not the easiest market to predict as already proven over and over again.
A Union Gaming representative stated: “We believe that volumes across virtually all segments were strong for most of December. Even the low end of the market is seeing a resurgence with notable increases in tour group volumes based on our on-the-ground observations.”
David Bonnet of gaming and real estate adviser Delta State Holdings sees “significant recovery underway, primarily driven by incremental visitation due to the Wynn Palace and Parisian Macao openings. Revenue gains consistent with a long-term sustainable recovery [are] due to increased competition but are also helped by a revenue shift from VIP to mass casino business and therefore increased gross profit.”
“This shift in the market should continue over the coming years, driven by incremental capacity expansion [new hotels, casinos, retail, and entertainment offerings] and transportation improvements in and around Macau, with increasing visitation and greater penetration of China,” said Sanford Bernstein analysts Vitaly Umansky, Zhen Gong and Yang Xie in a report on Macau titled Ascent of the Masses.
Earlier in 2017 analysts from Morgan Stanley released a report called “Macau 2022 – Power of Compounding” which established that the market cap will double its size by 2020 to US$230 billion. GGR in Macau could be as high as US$53 billion in 2022 due to an increase in spending growth, visitation, and infrastructure.