Macau’s Sweet New Song Continues to Lead Off 2018Published February 10, 2018 by Lee R
Macau is growing at full tilt now; sustaining that growth is the next strategic step.
Emerging Macau has come roaring out of the gate in 2018, but will the momentum continue?
Returns from January indicate a huge upswell in gross gaming revenue GGR of 36% year-on-year, representing the largest growth in four years.
Macau’s comeback even handily topped Wall Street prognosticators of 21% from the same month of the previous year.
Macau’s Gaming Inspection and Coordination Bureau reported total GGR of $3.25 billion, from data in the period of January and February when fluctuations are common due to the distraction of Chinese New Year celebrations.
The two week celebrations fall this year in mid-February, the period where fluctuations will likely occur, but will be offset by the substantive gains already reported for January.
Source of Spring
The new hot streak Macau is on can be traced to just over a year ago, when VIP players returned from a Chinese government crackdown on corruption that put Macau on the mend.
This led to improvements in junket credit that enabled large parties of high roller type players to come in from the mainland at the same time. This resulted in a 19.1 percent total growth trend by the end of the year, representing the first increase in three years.
Individual beneficiaries from Macau’s revenue growth include Wynn Resorts and Las Vegas Sands. Each operator received over 50% of their total global intake from their Macau holdings, raising Wynn Resorts individual shares over 75 percent and Sands individual shares up 51 percent.
Further development in store in Macau includes MGM Resorts International plan to open a second gaming resort on the Chinese protectorate island.
Caution on the Horizon
Not all are emboldened by Macau’s recent growth however. International credit debt watcher Fitch Ratings Director Colin Mansfield predicts an 11 percent deceleration to due to continued volatility in the VIP segment, the vast majority of which come in on the junkets. Mansfield attributes concerns to a “cooling” housing market that will tighten credit in mainland China, leaving less cash for play handy.
It remains to be seen how this impacts Macau as it continues to expand, on paper and in physical size.