Casino revenue in Macau increased last month, extending the industry’s recovery to a sixth consecutive month, while falling short of analysts’ estimates.
Gross gaming revenue (GGR) rose 3.1 percent to 19.3 billion patacas (US$2.4 billion), according to data from Macau’s Gaming Inspection and Coordination Bureau.
That compares with the median estimate of an 8.5 percent rise by eight analysts surveyed by Bloomberg and follows an 8 percent increase in December.
Casino stocks fell on the news, with Wynn Macau Ltd (永利澳門) dropping as much as 4.5 percent and Sands China Ltd (金沙中國) losing as much as 2.8 percent in Hong Kong trading. SJM Holdings Ltd decreased 2.6 percent and MGM China Holdings Ltd (美高梅中國控股) slipped 2.4 percent. The Bloomberg Intelligence index of Macau gaming shares dropped 2.6 percent, paring this year’s gain to 1.5 percent.
The world’s biggest gaming hub is switching gears to woo tourists and casual gamblers with family-friendly resorts, including Wynn Macau’s US$4.4 billion Palace casino featuring a synchronized fountain show and Sands China’s US$2.9 billion Parisian with its Eiffel Tower replica. While a recovery has been gathering momentum, the new casinos have been drawing visitors at the expense of some older properties.
“Macau’s latest wave of new resorts poses the classic gambler’s risk-reward dilemma,” Bloomberg Intelligence analysts Brian Egger and Margaret Huang wrote in a note on Monday. “Additions are key to Macau revenue recovery and long-term growth, yet entail challenges.”
Those challenges include new resorts posing a cannibalization threat to other Macau peninsula properties and margin pressure as a hotel surplus increases room rate cuts, the analysts wrote.
Las Vegas Sands president Rob Goldstein last week said that its US$2.9 billion Parisian casino in Macau gained traffic and posted net revenue in its full first quarter of operation, while denting patronage at its Sands Cotai Central property.
Betting volume from high-stakes players was softer than initially expected during the first few days of the Lunar New Year holiday, while the “luck factor has been unkind” to some casinos last month, said Macau-based analyst Grant Govertsen of Union Gaming Group.
“The reality is that we’ll need to wait for the February results to get a better picture of current trends on the ground given Chinese New Year straddles both January and February,” he said on Monday after the release.
Gaming revenue in Macau might also have been hit slightly harder by seasonal factors. The average daily revenue at Macau’s casinos in the week ahead of Lunar New Year slowed more than had been anticipated, analysts led by Vitaly Umansky at Sanford C. Bernstein & Co wrote in a note on Monday last week.
“The first two days of the Chinese New Year holiday are generally slower, especially in high-end play, than the remainder of the week-long holiday period,” the analysts led by Umansky wrote. “If the slowdown leading into Chinese New Year over the next week is more pronounced than expected, the monthly GGR estimate could fall short of our current expectation.”
Still, there are signs high-stakes players are coming back to the tables in Macau. VIP gaming, measured by revenue from the baccarat card games favored by high-stakes gamblers from China, rose 13 percent in the final three months of last year, marking a turnaround since the first quarter of 2014.
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