Sep 22, 2015 Newsdesk Latest News, Macau, Top of the deck  
Macau’s mass gaming revenue is likely to grow by approximately 4 percent quarter-on-quarter in the third quarter, “marking the first sequential increase since the first quarter 2014,” said UBS Securities Asia Ltd in a report issued on Monday.
UBS analysts Anthony Wong and Angus Chan said factors in the sequential improvement included a relaxation of official policy regarding use of transit visas by some mainland China residents visiting Macau, and “new openings of hotel rooms, leading to a higher headcount, helping the base mass segment”.
Macau casino operator Galaxy Entertainment Group Ltd added 1,570 hotel suites and rooms to the market with the opening on May 27 of its Galaxy Macau Phase 2 and Broadway at Galaxy Macau properties on Cotai.
The high cost of Macau hotel rooms in recent years relative to average urban disposable income in China – plus the fact that in past years a significant portion of hotel rooms in the top casinos were reserved for use by junkets – are factors that have been seen by some analysts as a barrier to building Macau’s base mass gaming market. The junket market has been in a sustained decline in the past year.
The average cost of a Macau hotel room was MOP1,511 (US$189) per night in the eight months to August, show data from the Macau Hotel Association. That was a fall of 5.4 percent from the prior-year period.
The per capita disposable income of urban residents in China during 2014 was RMB28,844 (US$4,525), according to data published in January by China’s National Bureau of Statistics. Thus the average nightly cost of a Macau hotel room in 2014, at MOP1,598 (US$200), represented 4.4 percent of Chinese urban dwellers’ average annual disposable income.
Macau hotels’ average occupancy rate during the first eight months of 2015 was 83.6 percent, a 7.5-percentage point fall from the 91.1 percent occupancy in the prior-year period.
The number of hotel rooms in Macau is set almost to double over the next few years according to official data released last month.
They showed there were 22 hotel projects under construction and 30 projects undergoing government approval at the end of the second quarter of 2015. They would together provide close to 21,100 new hotel rooms to Macau. The city had 29,279 hotel rooms at the end of June, up from 28,358 hotel rooms at the end of March, according to the city’s Statistics and Census Service.
But while there are signs of stabilisation in the mass-market segment, “the near-term outlook for VIP junket demand remains murky,” UBS said in its Monday note.
“In the VIP segment, we expect revenue to contract [over] 10 percent quarter-on-quarter in the third quarter of 2015. Compared to the peak levels in the first quarter 2014, the segment’s revenue run rate has now dropped by roughly 60 percent, with the current run rate at MOP26 billion or [about] US$3.2 billion per quarter, comparable to the levels in the fourth quarter of 2009,” said Mr Wong and Mr Chan.
Policy easing
UBS said that local policies toward the Macau casino industry had become “more accommodative”, citing what it referred to as possible “delays” in the introduction of a full smoking ban in Macau casinos.
David Bain, an analyst at Sterne Agee CRT, had mentioned in a note on Thursday the possibility of such a ban only being implemented in late 2016 or early 2017. He cited the source of the information as checks with several Macau legislators.
The city’s Legislative Assembly is conducting a 60-day public consultation process on a planned revision of the tobacco control law.
The Macau government might reconsider its position regarding a tabled ban on casino smoking lounges, depending on the results of the public consultation, said Macau’s Secretary for Social Affairs and Culture, Alexis Tam Chon Weng, in comments to local media on August 6.
UBS added in its Monday note regarding the prospects for the Macau gambling market: “There may be little the local government can do to directly stimulate demand, though we do not rule out other positive policy measures such as expanding the IVS scheme to more mainland cities.”
The latter is a reference to the Individual Visit Scheme whereby independent travellers from certain cities in China are allowed to travel to Macau and Hong Kong independently.
The UBS team revised its estimates growth forecasts for the Macau market, expecting 2015 gross gaming revenue (GGR) to decline by 34 percent compared to 2014. The brokerage expects Macau GGR to grow by 2 percent and 10 percent in 2016 and 2017, respectively. It said the new forecasts “reflect a weaker end-demand outlook, and potential drag from further renminbi depreciation in 2016″.
May 22, 2023
May 05, 2023
May 30, 2023
May 30, 2023
May 30, 2023
Gaming equipment provider International Game Technology Plc (IGT) says it has been directing a “significant portion” of its research and development effort to a “road map” for...(Click here for more)
6,000
Total number of visitors expected at the Global Gaming Expo (G2E) Asia 2023 Special Edition: Singapore, running from May 30 to June 1