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Gaming operators need right mix of clients to stay competitive: analyst

Competition in the local gaming industry is getting tougher as gaming operators are upgrading their facilities and new infrastructure is taking shape, so the winning formula is to strike the right balance between high-end and mass-market customers

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UPDATED: 22 Dec 2023, 5:50 am

Competition in the local gaming industry is getting tougher as gaming operators are upgrading their facilities and new infrastructure is taking shape, so the winning formula is to strike the right balance between high-end and mass-market customers, Bloomberg Intelligence Global Lodging and Asia Gaming Analyst Margaret Huang said Wednesday.

Huang made the remarks as she gave a presentation on Macau’s gaming industry trends during a Global Gaming Expo (G2E Asia) press conference in Cotai. The expo will take place at the Venetian on May 15-17.

Huang said that Macau’s gaming market shows signs of recovery with revenue growth in the VIP market last year after it had scored low in 2016, which led operators to step up their game to get a bigger share of the VIP segment.

According to Huang, in the first half of this year Sands will be revamping its VIP gaming floor at the Venetian and Melco will open Morpheus with high-end rooms, suites and villas.

In the second half of the year, Sands will be converting 600 hotel rooms at the Parisian into 300 premium suites and Melco will be enhancing its House of Magic show at Studio City, while SJM will open Grand Lisboa Palace with Versace and Karl Lagerfeld hotels next year, Huang said.

According to The Macau Post Daily also next year, Galaxy will open its Phase 3 with a hotel, MICE facilities and gaming space, Melco will open Countdown Tower, rebranded from Hard Rock Hotel, and Sands will have an additional 295 suites at Four Seasons and another 350 suites at St Regis, according to the presentation.

In 2020, Sands plans to open The Londoner, a rebrand of Sands Cotai Central, and Galaxy expects to have its Phase 4 with hotel, MICE and gaming space ready, Huang noted.

Moreover, infrastructure projects such as the Hong Kong-Zhuhai-Macau Bridge and Macau’s light rail transit (LRT) will be operational. The delta bridge will better connect Macau with its main source of visitors from the mainland and Hong Kong, which is also expected to extend visitors’ length of stay, according to Huang’s presentation.

With these enhancements, she warned that the operators should also bear in mind the mass market, which is growing in double digits and a profit driver.

“So I think the winning formula, if you will, with our outlook here is, among the operators, there will be more competition. So it’s really [about] finding the beautiful balance between the high-end revenue-generating business as well as the mass market, so you’re going to have a lot of capacity, put in the most valuable player and find that great mix between the two businesses to maximise the efficiency across each of the business areas,” Huang said.

She pointed out that according to Melco’s fourth quarter results last year, the company opted to focus on the high-end market which earnt the company a bit more share in the VIP segment but the company lost out on the share of the mass market segment, “which really hurt them when you stack them up with relation to the rest of the operators”.

Huang declined to say which operator was close to the winning formula, but it would be one that “knows how to run efficiently all across the board, and can capture everything from high-end as well as low-end”.

UPDATED: 22 Dec 2023, 5:50 am

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