Macau Casinos ‘Booming,’ MGM China to Renovate Resort Guest Rooms
Posted on: November 9, 2023, 09:33h.
Last updated on: November 9, 2023, 11:44h.
Macau casinos continue to see their businesses recover from the COVID-19 pandemic, after China President Xi Jinping lifted his “zero-COVID” policy late last year.
During his firm’s third-quarter earnings call this week, MGM Resorts International President and CEO Bill Hornbuckle said business is “booming” in Macau. MGM, through its subsidiary, MGM China Holdings, possesses one of the six commercial casino concessions in Macau, a Special Administrative Region (SAR) of the People’s Republic of China.
In the Macau market, it is clearly evident that business is booming,” Hornbuckle said on the earnings call with investors and analysts.
Hornbuckle revealed the third quarter delivered MGM China record earnings before interest, taxes, depreciation, and amortization (EBITDA). The July through September period topped the same quarter in pre-pandemic 2019.
MGM China reported adjusted EBITDA of HK$1.9 billion ($240 million) for the quarter. The unit said its casinos are outpacing the recovery of the rest of the market, as MGM China’s gross gaming revenue (GGR) returned to its 2019 levels, while the five other casino operators have only returned to about 84% of their pre-COVID gaming.
MGM China Upgrades
MGM China’s strong gaming performance in the third quarter grew the company’s market share in Macau from 14.8% to 15.5%. The company is winning over the mass and premium mass segment, which is now the dominant player demographic following the recent mass exodus of VIP junket groups.
“Results in Macau have been outstanding because of the ingenuity and execution of the MGM China team,” Hornbuckle said.
The MGM boss said the strong quarter has warranted renovations at both MGM Macau and MGM Cotai. Hornbuckle told analysts that “opportunistic changes” will be made to the casino floors to “maximize yield” and “take care of our mass and premium mass customers.”
The renovation will also extend to the resorts’ hotel rooms, where updates will be made to better accommodate the increasing number of guests patronizing the properties. MGM China’s Q3 report revealed that property visitation was 121% of the same period in 2019.
MGM China operates more than 2,000 rooms across MGM Macau and MGM Cotai. Along with the room renovations, Hornbuckle says MGM China will build six new villas at MGM Macau.
In exchange for the new 10-year gaming license MGM China was awarded last year, the company pledged to the Macau SAR Government to further invest MOP16.7 billion (US$2.1 billion) into its resorts. The bulk of the money, MOP15 billion (US$1.87 billion), must go to projects unrelated to casino operations.
MGM brass said they’re committed to diversifying Macau and growing general tourism to the enclave. Kenneth Feng, president and executive director of MGM China, said the company is focused on China’s upper middle class.
We are excited about the recovery in Macau, along with the diversification development of the city. We will continue investing in the gaming floors to enhance table yield. At the same time, we are committed to bringing in more unique integrated tourism experiences to attract international visitors.”
Pressed for comments on how macroeconomic pressures might impact Macau’s recovery, Hubert Wang, MGM China’s chief operating officer, said higher-income earners on the mainland, who represent the bulk of the demographic that frequents Macau, are doing just fine.
“China’s GDP growth is around 4% to 5%, but we cater to the upper middle class and the consumption in China between high-income groups and the base mass is very different,” Wang said. “You see continued growth in luxury goods in the high-income group, while the mass you have seen a decline. I think Macau is well-positioned to cater to the group with the high spending. This is what the concessionaires and the government are trying to do — to capture that group.”
Related News Articles
November 14, 2023 — 28 Comments—
November 16, 2023 — 17 Comments—
November 10, 2023 — 9 Comments—
November 17, 2023 — 8 Comments—
November 12, 2023 — 6 Comments—