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
