The Macau Metro Monitor. January 22nd, 2010
MACAU VISITOR ARRIVALS RISE IN DECEMEBER RTTNews
According to the Statistics and Consensus Service, total visitor arrivals increased 6.7% y-o-y to 2.04MM in December. Visitors from the PRC accounting for nearly 50% of the arrivals, grew 17.8% y-o-y to 1.01MM, while visitors from HK, Singapore, Japan and Malaysia all decreased in December. For 2009, visitor arrivals grew 5.1% to 21.75MM.
OH BEIJING, WHAT DOEST THOU? Destination Macau
China's recent announcement of bank loan tightening and fears of a rate rise could have a negative impact on the junket generated business that makes up the majority of Galaxy and SJM's business. Destination Macau believes that bank tightening efforts will be aimed at hot money sources like junkets rather than the growing Masses. As "social harmony" continues to be government's prime directive, the authors believe that projects that create employment and consumer spending will be supported by generous monetary policy. At the same time, wealthy individuals who have the large portions of their wealth parked internationally are also less likely to be impacted by bank tightening. While Destination Macau doesn't see any immediate slowdown, as the first 20 days of the year saw gaming receipts grow 67% and are on track to hit MOP 12MM, they do think that gaming revenues will slow down post Chinese New Year.
HERE COMES THE REST OF COTAI Destination Macau
It sounds like Sands is about to resume construction on sites 5 & 6. Apparently they sat down with their contractors this week and assured that all their suspended contracts would be honored. The $1.75BN needed to fund the project is already in place as five banks (Barclays, Goldman, Citi, BNP Paribas, and UBS) are beginning to syndicate their generous commitments. David Sylvester, the group's head of retail, will be relocating back to Macau once Marina Bay Sands is open, as will Matthew Pryor, global head of construction for LVS. The opening date is tentatively set for third quarter of next year.
LVS is also likely to put the 300+ apartment-hotel units managed by Four Seasons on the market shortly. According to Destination Macau the marketing strategy will involve asking the hundreds of high-rollers who currently are required to deposit sums of "front-money" into bank accounts if they want to play at the VML properties to use use those millions of idle dollars to buy an apartment instead. LVS can then simply put a lien against the asset to cover the gaming account.
Property prices have been strong lately, but its unclear if LVS will be able to get $300MM or $900MM of proceeds (based on original price talk of $2,000 psft). In order to get around government restrictions of residential sales on Cotai, the units will be sold under a "co-op" model, rather than as strata-title. If LVS is successful, there is little doubt that others will follow suit.
COD GOES ALL-OUT Destination Macau
According to gaming regulator sources, COD's mass floor winnings are up more than 25% (m-o-m) after the first 3 weeks of the year. Crown Towers were also full this past weekend, suggesting that VIP play was doing okay as well. COD has been pursing a very aggressive marketing campaigning, blanketing the HK ferry terminal, the TurboJet boats, and every access point to Macau with coupons leading gamblers to a HK$14MM in total giveaways at COD (compared to just HK$1.5MM at the Wynn). Despite all the promotions and marketing efforts, there can be little doubt that Venetian is still the preferred property in Cotai.