Operator News
China – April marks nine months of growth in Macau
By Phil - 2 May 2017
Nine straight months of revenue growth would suggest the worst is behind them for the casino operators of Macau.
GGR increased by 16.3 per cent year-on-year in April, reaching MOP$20.16bn up from MOP$17.3bn in April last year.
The 2017 total has so far increased by 13.8 per cent whilst April marked the third straight month that the market has outpaced predictions.
Union Gaming’s Grant Govertsen said: “With the beginning of May representing a Chinese public holiday (Labor Day), we expect strong GGR growth to be maintained. We are currently forecasting 15 per cent growth in May, followed by 17 per cent growth in June. The May calendar is unfavorable with one fewer Sunday and the June calendar is favorable with one additional Friday. In addition it is important to note that China’s #3 politician, the Chairman of the National People’s Congress, Zhang Dejiang, will be in Macau from May 8-10, which will likely put a slight damper on VIP trends.
“Further, Xi Jinping’s visit to Hong Kong in July will have a similar effect. Heading into 3Q we expect the GGR growth rate to moderate into the mid-teens, and then into the low double digits in 4Q. Heading into the summer months we are also looking for a somewhat sharper shift in GGR geographical mix. With the benefit of new supply Cotai now constitutes a majority of Macau-wide GGR.”
Wynn Resorts recently posted a Q1 revenue increase of 47.9 per cent with CEO Steve Wynn keen to highlight the role of the rebounding VIP sector.
He said: “The suppression of the VIP market was something that was the result organically of a process that the administration of President Xi Jinping thought was appropriate for the country, the elimination of corruption. And it had secondary effects on high-end products like shopping, and automobiles, and gaming was part of that. But having made a corrective move in China there comes a point when the corrective move finishes. And although corruption is still a major item, the initial impact has softened, because so much of the work that they thought had to be done, was done. And so people begin to return to normal spending habits, and they are not so strongly influenced by public policy issues that involve public officials. So the people are settling back into routines that they’re comfortable with, and that includes going to Macau and buying a new car or shopping at Louis Vuitton. We’ve always been part of that cycle. It wasn’t going to be permanent.”
Ciaran Carruthers, CEO of Wynn Macau, added: “We are very cautiously optimistic in terms of how the business in the VIP side is going moving forward. We’ve obviously seen some good growth over the last quarter. The initial, early signs are out that that’s going to be sustainable in the short period. For how long that can be sustained really is too early to tell. I’d like to see another quarter or two of some good solid growth.
“The upside of course is that with properties like ours we obviously benefit the most in the marketplace being that preeminent product for service and luxury. So as that new liquidity enters into the marketplace the premium master rates in junkets, we benefit more so them anybody else. So cautiously optimistic, but I think a little bit too early to call as a long-term sustainable story.”
