MGM Macau has been reallocating tables from its VIP gambling business to the mass-market segment in the light of the downturn in high roller gambling in the city. Jim Murren (pictured), chairman and chief executive of the parent company MGM Resorts International, confirmed the fact to GGRAsia on Tuesday on the sidelines of Global Gaming Expo (G2E) 2014 in Las Vegas.
VIP gaming revenues in Macau fell year-on-year for three months in a row from June to August. Investment analysts are generally predicting that the September numbers will also show a year-on-year decline. Some are saying that mass-market revenues are also starting to decelerate.
But the downturn in the high stakes baccarat business is not making any difference to plans for a revamp at MGM Macau, Mr Murren told us.
In August, the Macau-based MGM China Holdings Ltd said it would invest more than HKD1.5 billion (US$194 million) up to the year 2016 to renovate its first and currently only Macau casino hotel.
“If the mass [market] becomes more important that’s good. The margins are better; it’s a more predictable business. I think about 70 percent to 80 percent of our EBITDA [earnings before interest, taxation, depreciation and amortisation] in the last quarter was from mass,” said Mr Murren on Tuesday.
“Like many operators we’ve been reallocating tables from VIP. We have plenty of flexibility around that,” he added.
But he said that any sustained market changes would be taken into account in the design of the firm’s under construction MGM Cotai property on the Cotai Strip away from the traditional downtown area.
“In relation to the new property – the US$3 billion property that we’re building – we’re talking a lot of those trends in mind. But [there] we’ll have so much more room to do a lot of everything.”
He added: “I think with the VIP business people are getting a little bit worked up about it. But I think it’s very short term this turbulence, and I think some time next year we’ll see that [VIP] perk up.
“We’ve been able to diversify our offer probably than most. In most months we are number one or number two in slots in the market for example. And in the mass we’ve been able to segment our business in a fairly granular way, which has really been verified.”
Notwithstanding Mr Murren’s comments on diversification, public data analysed by GGRAsia indicate that in the first half of 2014, MGM China’s non-gaming revenue as a proportion of all revenue, was only 1.1 percent. That was a 2.5 percent fall judged year-on-year.
Only SJM Holdings Ltd, the local incumbent founded by Stanley Ho Hung Sun, had a lower percentage of non-gaming set against total revenues.
The other one-property operator in Macau – Wynn Macau Ltd – had 5.4 percent of all revenues from non-gaming.
Earlier during a keynote panel at G2E at the Sands Expo and Convention Center, Mr Murren said all the Las Vegas operators with Asian operations – and others besides – had benefited from crossover business as Asian players and consumers were coming to Las Vegas in greater numbers.
The Nevada State Gaming Control Board reported that in June baccarat win (amount staked less prizes paid) for Clark County including the Las Vegas Strip rose 155-percent year-on-year. Baccarat is the table game of choice for Chinese and many other East Asian gamblers.
“Every year more and more customers are coming to Las Vegas as a result of the fact that they have gambled in Singapore or Macau. And Wynn Resorts, Las Vegas Sands and MGM [Resorts] have benefited from the fact we have operations in both Macau and Las Vegas, and in the case of [Las Vegas] Sands in Macau, Singapore and Las Vegas.”
He added: “That’s exciting, because such a small proportion of the mainland Chinese person has ever been to Macau, big as that market is today. And that’s why we are all excited about Japan.”
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"I am not going to speculate on what the [casino licence refreshment] tender requirements would be. I have full confidence and faith in the Macau government to treat everyone fairly"
Wilfred Wong Ying Wai
President and chief operating officer of Macau-based casino operator Sands China