Higher commissions may be driving the junket switch from the Peninsula to Cotai, but that doesn’t explain the Mass shift.
The following charts show monthly market share of Mass revenue, VIP revenue, and Rolling Chip volume generated on the Cotai Strip as a percentage of total Macau. It is clear that Cotai has been gaining share sequentially throughout most of this year in all three categories. The gains cannot be attributable to new supply since City of Dreams opened on June 1st, 2009. The other major new supply actually opened off Cotai: Wynn Encore, L’Arc, and Oceanus.
The Cotai bears (mostly Wynn bulls) will point out that City of Dreams has probably been more generous in recent months with their junket commission rate and we would agree. That certainly would pull VIP revenue away from the Peninsula since that is where most of that type of revenue is generated. However, a higher junket commission rate at CoD does not explain the Mass shift. The Cotai gains in Mass revenues have been as strong as the VIP shifts. With more entertainment options and bigger facilities, could it be that Cotai is becoming the “in” place to congregate for the lucrative Mass customer?
We also included Wynn’s market share in each segment. Wynn has lost a little Mass share this year, especially in August and we think in September thus far. What’s surprising is that despite the opening of Encore in April, VIP and RC share has stayed fairly constant, after normalizing for the obvious hold volatility. We would’ve expected better.