Galaxy points to a brave new world for Macau

Galaxy points to a brave new world for Macau

Thursday, February 25, 2016 Totally Gaming
The casino operator saw a significant rise in non-gambling revenue in 2015

Macau’s gaming sector faced with another dismal set of results. But could there be a little light at the end of the tunnel?

With MGM Resorts having this week reported a 33-per-drop in net revenue in China and announced the postponement of its new casino in Macau, both Galaxy Entertainment and Crown Resorts have released details of a major decline in performance in the territory.

Galaxy, which owns the Galaxy Macau and StarWorld Macau properties, said that profits fell by 60 per cent to $4.2bn (€3.8bn) in 2015, with full-year group revenue decreasing by 29 per cent year-on-year to $51bn.

Crown’s Melco Crown Entertainment joint venture endured a torrid first six months of its financial year, with reported profits falling by 89 per cent to $6.8m, causing a 34.8-per-cent drop in the group’s overall net income.

Macau’s gaming sector has now endured 20 consecutive months of decline, due in the main to the national government’s clampdown on corruption. It is believed that Beijing wants Macau to switch its focus to entertainment and hospitality and rival the 63 per cent of revenue that Las Vegas generates from non-gambling activities.

While some, including Melco chief executive Lawrence Ho, think that there is little chance of success for a new Las Vegas springing up in China – Macau’s non-gambling sector stood at around 10 per cent in a study released in 2015 – Galaxy’s results gave a little cause for hope.

The company said that non-gaming revenue at the Galaxy Macau was up 52 per cent year-on-year to $2.3bn, with Q4 revenue up 82 per cent, while hotel room occupancy was at 99 per cent.

The company added: “This impressive growth reflects the addition of two new hotels, The Ritz-Carlton Macau and the JW Marriott Hotel Macau, and a vastly improved selection of new retail, food and beverage, entertainment and leisure.”

Galaxy also spoke confidently about StarWorld Macau, which it said “is in the process of transitioning to a mass centric property”, while hotel occupancy at its Broadway Macau was at “virtually 100 per cent”. The company added that the 3,000-seat Broadway Theatre “has virtually sold out every concert and is playing an important role in enhancing the overall appeal of GEG's Cotai portfolio”.

The company said: “While considerable challenges persist in 2016, GEG is encouraged by supportive comments made by the Government in relation to the industry, including greater clarity on the completion of the Taipa Ferry Terminal and Hong Kong-Zhuhai-Macau Bridge, due in 2016 and 2018, respectively.

“Further, Galaxy is cautiously optimistic that the market is at the early stages of stabilising, as evidenced by modest final quarter sequential growth in Macau's gross gaming revenue and healthy visitor numbers during the 2016 Chinese New Year period.”

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