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Our very own Anna Massion was in Macau and here are some notes from her trip.



MACAU TAKEAWAYS                                                                                                                              

Commission caps:

  • Went into effect on September 22, but the government won’t check until Oct 1, 2009
  • The cap is set at 1.25% or 44% caps for revenue share properties
  • Rooms will be included in cap at a rate at “cost”. which the government estimates as 40% off of advertised room prices
  • F&B will be included in cap at a rate of 30% off advertising pricing
  • Should be easy to enforce since the government gets the numbers daily from the operators and there aren’t many “secrets” in Macau
  • Should be mildly positive margins for the operators that pay above those rates
    • Altira if it ever gets back to where it once rolled
    • Galaxy rumored to be at the high end of the payout scale

Lowering the tax rate:

  • Unless the Macau market is materially negatively impacted by Singapore for more than just a few months there is no reason for the government to seriously consider a tax cut

Visa Restrictions:

  • Restrictions were clearly eased, some say as early as July
  • The reason the restrictions were put there in the first place was to help keep visitation manageable given the current infrastructure constraints
  • There is some fear that if growth becomes unmanageable again that the government will once more restrict visitation

Other random impressions:

  • China stimulus is having a big impact on growth, especially VIP growth
  • There seems to be some confusion about whether quoted revenues of 10bn MOP is an extrapolated number for all of September or a month-to-date number
  • People are feeling more confident about the economy
  • Some don’t believe that Singapore will have a large impact on Macau. The vast majority of the visitors are Chinese coming from Guandong.  The properties with the highest exposure to fly in high rollers from SE Asia & ME will see some impact
    • South & SE  Asia made up almost 7% of the visitation into Macau on a trailing 12 month basis (from July).  Surely some of that visitation will now go to Singapore – at least on a trial basis, or visit Macau less frequently
  • Macau is definitely getting more and more westernized, more and more non-Asian tourists there
  • More people are playing slots ... this was the first time we noticed people playing slot machines
  • Lots of people are coming on package vacations for one day or so and are spending no money – they visit properties but leave without gambling.  Unfortunately, lots of them seem to be going to CoD
  • Macau property market is hot again


  • Macau Junkets don't think they will be in Singapore given the regulatory hurdles
  • It took IGT 9 months to get licensed and IGT is licensed everywhere
  • LVS likely a May/June opening


  • It seems unlikely Wynn will get back to the high teens market share it once enjoyed before the opening Encore, and even that will not guarantee more share; MGM is finally focusing on its operations and CoD has been additive to the market
  • It is unclear exactly why Wynn is doing this IPO but some ideas include:
    • Given his history, he doesn’t like being levered
    • He’s getting old so wants to cash out some while the market it hot
    • Wants to be more “Chinese” than Sheldon
    • Will use the money to eventually build out Cotai
    • Looking at acquisitions (Fontainbleau/ Bellagio)
    • Aqueduct
    • Our view is that since there is no corporate income taxes on Macau gaming profits, it is more efficient to separate as much of Macau operations as possible from the parent (WYNN)


  • Sands should be negatively impacted in 2010 when Oceanus opens.  It is unclear as to how much, but there will certainly be some negative impact
  • Venetian continues to do well, FS should ramp over time.  Good mass business just takes longer to develop
  • Sometimes it's all about perception and press, and the locals are clearly sore about the fact that LVS stopped construction on sites 5 & 6 and fired a lot of people while continuing to construct Singapore
  • We would be surprised if the government doesn’t make them promise to complete 5 & 6 as a pre-condition to the IPO.  So, the hope is that WYNN’s IPO will be white hot, and that LVS can ride on those coattails.  
  • Sites 5 & 6 will likely take at least 18 months to complete so we don’t see anything opening before end of 2011/early 2012.  LVS will have to raise more debt to complete the construction


  • Building a mass business won’t be easy and will take longer than most probably hope.  The jury is still out on whether this property will be able to generate a successful mass business
  • They have 35,000-40,000 visitors daily. Unfortunately that visitation isn’t turning into $$$ yet.  Their mass is still only 30% of Venetian’s despite visitation being 60-65% of Venetian’s run rate.     
  • Commission caps should be incrementally positive for them since they are known to pay the most
  • Says september is definitely slower at CoD- especially mass business. VIP is good though think that october will be better
  • Crown is all VIP. Hardrock all Mass.
  • Crown towers have 92-94% occupancy


  • Will announce scope and completion of their Cotai project by year end, hearing it could be as early as end of 2010 for Phase 1


  • We heard that they held very high for the first three weeks in September
  • Generally doing very well from a share standpoint – they clearly appeal to a specific market
  • L’Arc seemed to open smoothly and Oceanus should do well given the location


  • They are finally focusing on the property
  • MGM is simply too nice of a property not to generate at least $200MM of EBITDA and is on its way of doing just that now that management is focusing on running the property
  • The company has doubled the number of junkets operating there
  • They are planning an IPO for next year. They just want to take some money off the table and have a HK listing, plus they can certainly use the cash