China – Junkets closing Macau VIP rooms to expand internationallyBy Phil - 21 January 2015
With a tightening of transit visas and a continued crackdown on austerity for Chinese gamblers, Macau’s junket operators are now looking overseas for new opportunities to ship in their VIP player bases.
Junket operators helped generate 60 per cent of Macau’s $44bn in casino revenue in 2014. But now a host of junkets including Gold Moon, Suncity, Heng Sheng Group, David Group, Tak Chun, JimeiGroup, Golden Group, Mega Stars and Golden Dragon are all looking at new opportunities as China’s anti-corruption campaign continues to discourage their higher-spending casino players from visiting casinos in Macau. IGamiX Analyst Ben Lee described it as ‘the biggest expansion phase ever’ for the junket operators.
Gold Moon Group confirmed it had shut a 16 table VIP room at Sands China’s Sands Cotai Central. It citied opportunities in the Philippines, Vietnam and Australia, amid a downturn in business in Macau, as being the reasons for the closure. Gold Moon also operates VIP rooms at Melco Crown’s Altira; Galaxy Macau; Wynn Macau and Pharaoh’s Palace Casino at the Landmark Hotel.
With the central government demanding that Macau diversify its economy from gaming, Gold Moon said it was doing the same, highlighting its food souvenir business in Hong Kong, its seafood restaurants in Macau and its future aspirations to open a tourism agency in Macau. It envisages half of its future junket business to be outside of Macau.
David Group confirmed it was shutting three of its seven rooms tailored to high rollers at casinos in Macau due to the downturn in business.
Frank Ng, David Group’s Director of Corporate Communications, described it as ‘adjusting our business strategy.’
He said the company would reopen the rooms when the market demands. Similarly to Gold Moon, it linked its decisions to look elsewhere to the government’s guidelines to develop the city into a global tourism destination.
He revealed that David Group was already taking VIP players to Asian countries with more relaxed visa approval process, including the Philippines, Vietnam and South Korea. It plans to add Australia to that list by the end of 2015 and then at some stage to Europe.
Heng Sheng, one of Macau’s newest junket operators, began expansion into international markets earlier this year and has already signed deals with Danang’s Crown Casino in Vietnam and Walkerhill Casino in South Korea. The plan is to open VIP rooms and then take a stake in the actual casino.
Suncity already has a joint venture in the Cagayan Holiday and Leisure resort in the north of the Philippines whilst Jimei operates two resorts in the Philippines as well as a casino cruise ship from Hong Kong.
Macau’s Secretary for Economy and Finance Lionel Leong Vai Tac reacted to the closures by saying: “We are paying attention and the relevant services will deal with these matters.”
He added that the government was ‘extremely concerned’ and could modify industry rules on the licensing of junkets if required.
The move to diversify away from Macau has been building for some time for the junket operators. In the summer, Hong Kong-listed Amax Holdings signed a non-binding letter of intent to buy a 51per cent stake in Samoa-born Southern Ruby, who has the rights to build and operate a casino at the Lara Park Hotel in Girne, Northern Cyprus, and take a 10 per cent share in the hotel. This followed a majority interest purchase in a lottery related business located in Guangxi, China.