China’s “still challenging” economic environment – namely modest demand for its exports and a struggling property market at home – clouds the sustainability of Macau’s premium mass gaming segment, said Bloomberg Intelligence’s Asia-Pacific gaming and leisure senior analyst, Angela Hanlee (pictured), in an interview with GGRAsia.
Since post-pandemic market recovery began, the premium mass gaming business in Macau had been performing well, underpinned by the city’s casino operators’ successful “conversion of junket clients into their own”, remarked Ms Hanlee.
A number of investment analysts has argued that demand from this segment of mainly Chinese gaming patrons is resilient to the impact of macroeconomic slowdown on the mainland.
“China’s local property market and its weak export demand are both going to be the factors that we will keep monitoring,” regarding “how the premium mass business is doing,” said Ms Hanlee in comments on the sidelines of the G2E Asia 2024 casino industry trade show and conference held last week in Macau.
“People will spend money, but at some point, they won’t make gambling that frequent. There is… a life expectancy of gamblers,” in terms of the addressable market, observed Ms Hanlee.
China’s macroeconomic outlook was likely to remain a near-term “challenge” to Macau casino operators’ ability continuously to engage premium players, the Bloomberg analyst suggested.
Though she said patterns of discretionary spending might change in China in the longer view, if the younger generation of Chinese consumers become less focused on home ownership compared to their parents.
Ms Hanlee stated: “If the property market in China cannot do well, then will people buy property at all? If they don’t buy, how are they going to use this money? There is a young generation of people [on the mainland that indicate] they don’t want to get married, and they don’t want to have kids,” said Ms Hanlee.
She added: “[Chinese] young people’s spending mindset is very different,” from the older generations. “They are very willing to spend [on leisure offerings]. They don’t want to save money, and they don’t have to.”
Ms Hanlee also spoke about regional competition to Macau, as other jurisdictions either legalise – such as Japan – or mull legalising – such as Thailand – casino resorts.
“Cambodia and Vietnam might get more affected”, should Thailand eventually become host to several casino resorts, suggested Ms Hanlee.
“What makes Macau different is the cluster effect. As a gambler, you come to casino A, and lose some money betting; and you can still try casino B, and so forth. There are many options not only on non-gaming, but also different casino floors for people that are trying their luck, and extend their stay,” said the Bloomberg analyst.
On Macau peninsula and in the city’s Cotai district, major casino properties operated by the six gaming concessionaires are all walkable distance from each other. “The cluster effect is very important for people to decide on the place to gamble,” suggested the Bloomberg analyst.
In an April 11 memo on Thailand’s casino legalisation progress, international law firm Baker McKenzie noted the nation’s parliamentary committee had initially proposed that any casino complexes be spread around that country.
The commitee suggested such facilities should be within a 100-kilometre (62.1-mile) radius of certain international airports in that country; and either be in designated tourist provinces; or in designated border provinces.
Location would still need discussion at local public hearings, the law firm noted.
