The Parisian Macao is likely to operate a total of up to 450 tables when it opens on September 13, says a note from brokerage Sanford C. Bernstein Ltd.
On Saturday, the Macau government announced the US$2.7-billion new Cotai casino resort (pictured), promoted by Sands China Ltd, would be granted a total of 150 new-to-market live dealer tables: 100 on opening; followed by a further 25 tables on January 1, 2017; and the remaining 25 on January 1, 2018. All the new-to-market tables for the Parisian Macao are earmarked for the mass-market segment.
“We expect that the Parisian will open with 425 to 450 tables [by moving tables from some of its other Macau properties]. Of this amount, we anticipate approximately 50 to 60 tables to be operated as VIP with three junkets and as direct VIP,” said analyst Vitaly Umansky in a Sunday note.
The government has additionally said the Parisian Macao would be authorised to have 1,600 “slot machines” – it was unclear if the figure also included electronic table games.
A investor presentation accompanying the fourth quarter 2015 earnings call of Sands China’s parent firm, Las Vegas Sands Corp, had mentioned the Parisian Macao would have capacity for up to 450 gaming tables and 2,500 slot machines and electronic table games.
“Following the 100 tables allocated to Wynn Palace, there are theoretically over 1,300 still available for allocation between now and 2022,” added Sanford Bernstein’s Mr Umansky. He was referring first to the number of new-to-market live dealer tables issued at opening to Wynn Macau Ltd’s new casino venue which opened on August 22 (with a further 50 to come in two tranches); and second, to the Macau government’s market-wide table cap designed to limit the growth in the number of such tables in Macau to 3 percent compounded annually for a 10-year period up to December 2022.
Wynn Palace eventually opened with approximately 350 gaming tables: the firm transferred about 250 tables from its other Macau property on the peninsula to the Cotai casino resort. Wynn Macau Ltd had previously mentioned Wynn Palace had capacity to accommodate 500 tables.
Mr Umansky stated, regarding the new allocation for the latest Cotai venues: “Our initial view is that even with smaller than originally anticipated table allocations, the properties can still be successful by transferring excess table capacity. There may be issues with lack of gaming capacity in the more distant future when the market returns to several years of growth, but now and for the next few years, gaming capacity should not be a limit on growth.”
The brokerage noted – citing information from the local regulator, the Gaming Inspection and Coordination Bureau, and the institution’s own analysis – that VIP casino gross gaming revenue (GGR) per table per day had reached a peak of more than US$43,000 in the first quarter of 2014, but by the second quarter of 2016 had dropped by more than 50 percent from that peak, to US$20,000.
“For MGM China [Holdings Ltd], which is planning on opening MGM Cotai in the second quarter 2017, a low table allocation may be slightly more problematic than for Wynn, as MGM China only has approximately 425 tables in its inventory,” added Sanford Bernstein.
DS Kim and Daisy Lu, analysts at JP Morgan Securities (Asia Pacific) Ltd, said in a Sunday memo: “It’s interesting to note that: a) the number of new tables per [Macau] project has been decreasing every year since 2011; and b) projects that are opening in the same year get the same number of tables, regardless of the amount of capex [capital expenditure] or non-gaming offerings, or the number of tables that each concessionaire currently has.”
The government has said that new-to-market table allocation for new schemes would relate – among other factors – to how much they contributed to the city’s non-gaming tourism appeal.
Studio City, majority-owned by Melco Crown Entertainment Ltd, and the Galaxy Macau Phase Two plus Broadway Macau project, promoted by Galaxy Entertainment Group Ltd, respectively opened in 2015. Each project eventually received 250 new-to-market tables. Studio City in particular was marketed as a mass-market property with non-gaming attractions for families.
Analysts at Japanese brokerage Nomura gave some commentary in a Monday note about what they termed the “deteriorating” quality of Macau visitors.
“While overnight visitation has been growing strongly (up 8 percent in the second quarter 2016 – the fastest growth since 2011 – the quality of visitors has been deteriorating (with non-Guangdong IVS [Individual Visit Scheme] visitation down 8 percent in the second quarter),” stated the Nomura team.
“That explains the: 1) declining [Macau] hotel room rate; 2) declining average spend from overnight visitors (from MOP3,082 [US$386] in the fourth quarter 2014; to MOP2,543 in the second quarter 2016); slow mass gaming growth of 5 percent after two major new openings; and disappointing ROIC [return on invested capital] of 3 percent to 4 percent from Studio City and Galaxy [Macau] Phase 2,” they added.
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”Given that the blanket casino closure [in Macau due to Typhoon Mangkhut] happened on an all-important weekend day… we expect that somewhere between MOP1.1 billion [US$136.2 million] and MOP1.5 billion in GGR will be lost”
Analyst at Union Gaming Securities Asia