Macau’s April casino revenue dropped less than analysts estimated in a sign of stabilization as casinos shift their focus to attracting mass gamblers and tourists.
Macau´s gross gaming revenue in April decreased 9.5 percent to 17.3 billion patacas (US$ 2.2 billion), according to data from Macau’s Gaming Inspection and Coordination Bureau, marking 23 months of a consecutive decline.
Macau’s casinos have been in a downturn since mid-2014 as China’s anti-corruption campaign and a slowing economy kept the country’s high rollers away from the world’s largest gambling hub.
Still, the industry’s mass market revenue has started to bottom out since last year with narrowing revenue declines.
Operators such as Galaxy Entertainment Group Ltd., Wynn Macau Ltd. and Melco Crown Entertainment Ltd. are strategically focusing on the more profitable mass-market segment of tourists and recreational gamblers with new resorts.
“The casinos produced another reasonable monthly revenue performance in what is a seasonally slower shoulder month,” Tim Craighead, a Bloomberg Intelligence analyst said.
The Cotai strip in Macau is home to about a dozen casino resorts.
Macau’s five-year development plan encouraged casino operators to diversify their businesses and forecast an increase in the proportion of casinos’ non-gaming revenue to 9 per cent by 2020 from 6.6 per cent in 2014.
Other casino operators are also looking for new ideas to diversify their business from high-end gambling. The US$ 4.1 billion Wynn Palace will offer air-conditioned cable car rides and Sands China Ltd.’s Parisian will feature a half-size Eiffel Tower replica when they open in September this year.
While the mass market has seen some recovery signs, Macau’s casino operators are still exposed to the debt-ridden gaming promoters, who lend to high-stakes gamblers, as the local government continues to tighten its regulation on the industry.
Junkets are still under significant operating pressure with at least HK$30 billion in bad debt still outstanding at conservative estimates.
(Macau News/Bloomberg)
