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China – Galaxy Macau delaying launch of Phase 3 as revenues slide

By - 14 August 2019

Galaxy Entertainment is delaying the first launch of Phase 3 of its flagship Cotai casino resort, Galaxy Macau with the opening set for late 2020 instead of the middle of next year as planned.

Phase 3 will include another 1,500 hotel rooms, extra casino space, and an arena with 16,000 seats. The group has since applied to register as trademarks the names Galaxy Arena Macau and Galaxy International Convention Center.

The news of the delay came as Galaxy posted a seven per cent fall in second-quarter earnings to US$26.2bn in what Galaxy described as a ‘solid’ quarter in the mass-market segment offset by a ‘challenging’ quarter for VIP.

Adjusted EBITDA decreased four per cent year-on-year to $8.3bn.

Dr. Lui Che Woo, Chairman of GEG said: “The overall market in Macau remains relatively stable despite a decrease in VIP volumes due to increasing regional competition, ongoing trade tensions and a slowing Chinese economy. We have continued to make good progress with our previously announced $1.5bn property enhancement program. We believe these property enhancements will ensure the continuing attractiveness and competitive position of both Galaxy Macau and StarWorld Macau. In the shorter term some customer disruption will occur but medium term the program will create shareholder value. Furthermore, we continue our construction works in Cotai Phases 3 & 4 and review international expansion opportunities on a case by case basis.”

Galaxy Macau, the primary contributor to the Group’s revenue and earnings, reported net revenue in 1H 2019 of $18.8bn, down five per cent year-on-year. StarWorld Macau’ was down eight per cent year-on-year to $5.7bn. Broadway Macau, the family friendly, street entertainment and food resort supported by Macau SMEs, which doesn’t have a VIP gaming component, saw its revenue increase to $298m for the half year from $273m.

Dr. Lui added: “In the medium to longer term, we remain confident in the outlook for Macau due to the increasing wealth of the middle class in Mainland China, that will in turn result in the growth of demand for tourism, leisure and travel. We are pleased with the opening of Hong Kong-Zhuhai-Macau Bridge and look forward to the opening of Guangzhou-Zhuhai Intercity Railway expansion line to Hengqin which will make Cotai even more accessible.”

“During the first half of 2019, Macau experienced a number of events that impacted the market, most notably in the VIP segment. These included the introduction of smoking lounges in the VIP rooms, the slowing world economy and increased competition from new capacity and also greater competition from regional casinos,” he added. “In the longer term Macau’s VIP business will remain competitive. The introduction of smoking lounges on 1 January 2019 has been received by our employees and guests. As a result of GEG installing new smoking lounges throughout the resort, we have seen players redistributed throughout the property resulting in selected areas being less congested as previously, thereby resulting in an overall enhanced customer experience.”

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