Analysts Predict Flat Macau Casino Win in 2019, China Economic Slowdown Blamed
Posted on: April 29, 2019, 11:37h.
Last updated on: April 29, 2019, 11:37h.
Fitch Ratings analysts say Macau casinos will report flat gross gaming revenue (GGR) or single-digit growth in 2019.
![Macau casino revenue GGR](https://www.casino.org/news/wp-content/uploads/2019/04/P1010085.jpg)
The world’s richest gaming hub will be impacted by the ongoing economic slowdown in China, the country that is responsible for the vast majority of visitor arrivals in the enclave. Casinos in the Special Administrative Region won $37.85 billion last year, a 14 percent gain on 2017.
In Fitch’s “All In: Global Gaming Handbook” published today, the rating agency says “due to the assertive fiscal stimuli by the mainland government, diffusion in trade tensions with the United States, and the recently completed transportation infrastructure improvements,” GGR will be “flat to low single-digit” growth this year.
Macau’s six licensed casino operators won $9.4 billion in the first three months of the year. That’s a 0.5 percent year-over-year decline.
Economic Cooldown
2018 marked Macau’s second year of back-to-back gaming revenue growth. It followed three years of declines after China President Xi Jinping directed law enforcement agencies to better monitor junket travel groups that bring mainland high rollers to the enclave and lend them credit to gamble.
The $37.85 billion win last year is a 36 percent rebound from the enclave’s $27.9 billion haul in 2016. Analysts forecast the years of double-digit gaming growth are over for the time being.
In its own 2019 Macau outlook, JPMorgan analysts DS Kim and Sean Zhuang predict single-digit growth. However, they believe the enclave can return to more prosperous performances in the years ahead should visitation continue to increase.
Macau welcomed more visitors than ever last year, as 35.8 million people ventured to the enclave. The nearly 10 percent increase was a result of casinos transitioning from focusing on VIP high rollers to more of the mass market.
Melco Resorts billionaire Lawrence Ho says margins on general public play are typically four times higher than VIP win.
Market Control
Macau is home to six concession holders – Las Vegas Sands, MGM Resorts, Wynn Resorts, SJM Holdings, Galaxy Entertainment, and Melco Resorts.
Sands is the dominate operator. The casino parent to The Venetian, Parisian, Cotai Central, Plaza, and Sands Macau accounted for 31 percent of Macau’s mass market gaming revenue last year.
We view LVS as best positioned among global gaming operators due to its mass market orientation,” Fitch said in its report. “The mass market segment in Macau is less cyclical, more profitable, and benefits from secular tailwinds related to the rising middle class and improved transportation infrastructure in the greater China area.”
The Hong Kong to Macau bridge, a 34-mile expanse across the Pearl River Delta, opened last fall. The $19 billion project drastically cuts down automobile travel time between the two densely populated regions from four hours to just 35 minutes. The bridge is expected to make Macau a more desirable location for business conventions and exhibitions due to the linkage to Hong Kong’s airport – the eighth-busiest airport in the world.
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