September heralds a Macau revival

September heralds a Macau revival

Tuesday, October 4, 2016 Posted by Andy McCarron
Revenues rise 7.6% as new supply drives increases

A glimmer of better times ahead for Macau came via the revenue figures for September which showed gross gaming revenue (GGR) rising 7.4% to MOP18.4bn (US$2.3bn) off the back of increased supply following the openings of the Wynn Palace and Sands China’s Parisian Macau.

This beat August’s slight 1.1% GGR rise, the first month of revenue increases after a 26-month sustained revenue slump.

Analysts from Union Gaming said the September figures were also boosted by one extra Friday night compared with last year. The August and September figures mean that the third quarter saw a 1.2% rise in GGR overall.

Grant Govertsen from Union said the September figures had been boosted by the efforts of Sands China in heavily promoting the opening of the Parisian. “We believe that Sands China heavily marketed the Parisian into mainland China in advance of the opening and our observations across Cotai this past month would suggest this has paid dividends for the company as its central cluster has consistently felt busy,” he wrote in a note to clients over the weekend.

He added that he believed the recent evidence from room-rate surveys of inventory being discounted was not a pointer to softer gaming trends. “We think the discounted room story is actually driving incremental customers to the market – another advantage for Sands China given its dominant amount of room inventory.”

Although Union Gaming expects this week’s Golden Week holiday to push trends for early October up further, he warned that the upcoming visit of Chinese Premier Li Keqiang, who has a two-day visit to the territory scheduled for the second week of October, would likely mean a tail-off during the visit. Since taking office, Premier Li has been leading an anti-corruption charge that many suspect has led directly to the revenue falls in Macau.

“With history as a guide, we would expect high-end play to taper off notably in the days leading up to and during his visit,” concluded Govertsen.

While the September revenues signaled the possibility of good times ahead for the market overall, the woes of junket operator Iao Kun Group continued late last week as the company announced the closure of yet another VIP room, this time at Le Royal Arc Casino. It also announced that the agreement for the buyout of the Jeju Sun Hotel & Casino in South Korea had lapsed.

The Le Royal Arc room closure is the fourth announced in recent weeks, after it shuttered a room at the Sands Cotai and then at the two Galaxy Entertainment casinos in Macau in late September.

In a statement, the company admitted it was struggling to collect outstanding markers receivable and was concentrating its efforts in the near-term on paying down its line of credit owed to license operators. The statement added: “Consequently, and because of the lengthening and difficulty of collecting markers receivable, the Company will not be actively extending credit to its clients during this period and therefore it expects business volume to be minimal.”

TotallyGaming says: As the Iao Kun news demonstrates, Macau is clearly not out of the woods yet, but still the evidence is now starting to accumulate that the market may well have hit bottom. All eyes now turn to the visit of the Chinese Premier Li to see whether he gives any indication of how the authorities now view the more clearly mass market Macau.

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