UPDATE FROM MACAU

Below are some highlights from our Macau trip.  

 


TAKEAWAYS FROM MACAU TRIP

 

Overall Macau Trends

  • Market is off to strong start in December
  • No impact from China tightening
  • PWC’s forecast of a doubling of gaming revenues in 4 years is doable
  • Mass:  20% visitation growth, 10% GDP growth = 30% revenue growth, this is probably sustainable
  • VIP:  same as above except for credit multiplier so growth has been higher – there is a lot more credit in the market but consensus is that it is manageable

Mass Market Promotional Activity

  • CoD reinvesting the most –some say 30% - which means they will have the lowest margin
  • MGM only 23%
  • Venetian only in high teens

Asian expansion

  • Japan, Thailand, Taiwan, South Korea, Vietnam are all on the radar screens of the big Macau operators
  • MPEL wants to get involved, possible on a smaller scale somewhere in Asia to prove they can do it outside of Macau.  Very bullish about Asian gaming expansion prospects.

MGM

  • May be delivering on top and bottom line – not buying as much business as people think; just doing a good job
  • We're more bullish on the property’s prospects now than before the trip.  Recent revenue and EBITDA spike looks sustainable.

LVS November market share loss

  • Low hold impacted them
  • They also had a terrible first week because Beijing government officials were staying at Four Seasons/Venetian so the junkets stayed away.  Impacted 2nd week as well but weeks 3 and 4 were very strong.

Galaxy Cotai

  • Even the competition thinks it will be a nice product
  • Trial won’t be a problem, getting repeat business might be
  • Concern over management team since they’ve never operated a Mass property before
  • CoD could get blasted and is most at risk
  • Peninsula could give up 10-20% of its business to Cotai when Galaxy opens

MPEL

  • Studio city ruling in March – MPEL wants it and thinks they can get it
  • Lots 7/8 could persuade the Studio City antagonists to settle their differences – would be a positive for MPEL

WYNN

  • Cannibalization of Wynn Macau is inevitable when Wynn Cotai opens
  • Wynn Macau will need some material investment before Cotai opens (room renovation, some new restaurants, etc.) to limit cannibalization
  • Wynn Macau rebound is being sustained in December
  • Two new VIP rooms could juice market share

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