U.S.-based brokerage firm Sterne Agee says the revamping of two VIP rooms at hotel casino Wynn Macau has had a negative impact on the VIP overall market share of property owner Wynn Macau Ltd.
“We believe Wynn Macau’s refashion and expansion of two key VIP junket rooms led to a reduced table count for the second quarter of 2014,” analyst David Bain wrote in a note.
“Wynn Macau’s April (when construction began) through June VIP rolling market share averaged 10.9 percent versus 12.8 percent in January through May,” he added.
Sterne Agee says the works are expected to be complete before next Chinese New Year, on February 19.
The brokerage firm also mentioned ongoing market-wide VIP revenue weakness. Mr Bain said the segment is being negatively hit by short-term disruption from the FIFA World Cup, which ends on July 13, but also by other factors, including operators shifting to a higher mix of mass versus VIP tables.
“We do not believe current VIP trends are systemic, though expect continued gross gaming revenue headline unevenness for the foreseeable future,” he wrote.
In a report issued earlier this week on the Macau gaming sector, Goldman Sachs mentioned tighter liquidity and junket consolidation as some of the factors weighing on the industry’s bottom line. Reflecting the weaker VIP trend in June, the investment bank lowered its forecast for VIP gross gaming revenue (GGR) for full-2014 from 5 percent to 2 percent.
Macau’s casinos brought in MOP238.5 billion (US$29.9 billion) in VIP baccarat gaming revenue in 2013, up by 13.1 percent in year-on-year terms.
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"We [estimate] that these illegal [currency exchange] transactions account for somewhere between 50 percent to 60 percent [of Macau's annual gross gaming revenue]”
Managing partner at IGamiX Management and Consulting