Macau Will Return to 2013 Peak, Says Lawrence Ho
Posted on: May 2, 2017, 02:00h.
Last updated on: May 2, 2017, 11:49h.
Lawrence Ho is upbeat about Macau. In an interview this week with Bloomberg TV, the Melco International chairman and CEO described himself as “extremely bullish” on the enclave’s prospects, adding that he believed the economy would return to its 2013 peak within a matter of years.
His words came as the gambling hub reported its ninth straight month of rising revenues in April, as it continues to bounce back from a two-year economic slump.
The casino sector was hit hard by Beijing’s anti-corruption crackdown that spooked away Chinese high-rollers that once accounted for some 60 percent of its revenues.
“Definitely within the next five years, it will grow back to the $45 billion gaming market,” said Ho. “And that’s just the gaming alone, because the non-gaming part is significant.”
Crackdown Wasn’t Anti-gaming
Macau is beginning to pick up the pieces and has, in the interim, has reinvented itself as a destination for the mass-market, with non-gaming amenities designed to appeal more to Chinese middle-class families than the corrupt high-rolling Communist Party officials who were the target of the crackdown. And the good news is, Beijing approves, as Ho explains.
“The crack down wasn’t really focused on gaming, it was focused on anti-corruption and anti-extravagance,” he said. “Gaming, like all luxury sectors, was really just collateral damage. The peak of that crack down has long passed.
“The middle class and wealthy individuals in China, who didn’t do anything wrong, have realized they’re in the clear, and can now go back to living upscale [lives] and having fun.”
Ninth Straight Month of Growth
The recovery is gaining traction. Macau’s casino receipts for April grew by 16.3 percent to $2.52 billion, the third consecutive month of double-digit growth, and beating, once again, analysts’ estimates.
The reversal of Macau’s fortunes has sent casino stock rallying, as well as enhancing several Q1 financial reports published last week; particularly those of Wynn Resorts and LVS, which derive 64 percent and 59 percent of their revenues, respectively from their Macau operations.
And while many analysts are taking a cautious approach, Grant Govertsen of Union Gaming Group LLC said this week that Ho’s prediction of $45 billion by 2022 is definitely achievable.
“That type of growth would imply around 10 percent average annual growth, which feels realistic at this point,” he told Bloomberg. “The good news for Macau is that the government has anointed mass market as the future of Macau, and we would expect at least some level of support going forward to ensure mass continues to be the direction Macau is headed.”
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