Diversification of the Macau tourism market from a gambling focus to a leisure and business travel focus will not be easy, says a note from Wells Fargo Securities LLC.
“The evolution of Macau into a less gaming-centric destination will be an extremely slow and arduous process, in our view,” said the document issued on Friday by analysts Cameron McKnight, Robert Shore and Daniel Adam.
In late March Paulo Martins Chan, director of Macau’s Gaming Inspection and Coordination Bureau, said he thought the worst was over for the local casino industry, and estimated casino gross gaming revenue would fall 10 percent year-on-year in 2016. Investment analysts have linked Macau’s persistent revenue decline to an anti-graft campaign in China and a slowing economy there.
But the hope that leisure and business travellers can take up some of the slack in tourism capacity left by the absence of high stakes VIP and premium mass gamblers is not currently being borne out in the data, suggests Wells Fargo.
“Forward room rates remain depressed,” wrote the brokerage’s team. “Our proprietary survey shows March and April room rates tracking down 24 percent and 2 percent month-on-month, with March/April/May rates down 18 percent from September/October levels.”
Wells Fargo added it expected April gaming revenues to be down 15 percent year-on-year.
“April revenues are historically down 11 percent month-on-month versus March. This would imply -15 percent to -16 percent year-on-year in April and daily revenues of roughly MOP545 million [US$68.2 million],” wrote the analysts.
Non-gaming revenue for Macau casino resorts is “simply not large enough” to offset declines in gaming spend in the city, said a report issued in early December by Union Gaming Research LLC.
China’s central government and the Macau government have stressed they want to see diversification away from hardcore gambling and toward more general tourism.
On December 20, Macau’s Chief Executive Fernando Chui Sai On said the city’s administration would continue to promote development of non-gaming elements at the new casino resorts that are being opened on Cotai between now and the end of 2017.
On April 2, Yao Jian, deputy director of the Central People’s Government Liaison Office in Macau, said Beijing wanted to see more leisure and business visitors to Macau, including “more convention and exhibition visitors and more coming here for a vacation with their families”.
In 2014, fewer than 10 percent of Macau casino resorts’ gross revenues came from non-gaming activities, estimated Fitch Ratings Inc in a report issued in August last year.
Wells Fargo said in its Friday note: “In Las Vegas, gaming revenue is just one component – or just over 30 percent – of a typical [Las Vegas] Strip casino’s total revenue.”
Apr 24, 2018Belle Corp, the landlord of the City of Dreams Manila casino resort (pictured) in the Philippines, has made a proposal for its expansion and has submitted the idea to the venue’s operator, Melco...
Apr 24, 2018
Jan 04, 2018BMM Testlabs “ticks all the boxes” with regard to its...
Dec 08, 2017The regulated casino industry is well versed in dealing...
Oct 23, 2017The presence of some of the leading cloud computing...
Jul 11, 2017The Tokyo local election setback for Japan’s governing...
Jul 06, 2017A multibillion U.S. dollar casino project on Vietnam’s...
First quarter net income recorded by Crane Co, a supplier of payment and merchandising technology to the gaming industry