In this interview with CalvinAyre.com’s Stephanie Raquel, Grant Govertsen of Union Gaming discusses ways how Macau could sustain the positive gross gaming revenues in 2017.
The tides have finally turned in favor of Macau after 27 consecutive months of slumping gross gaming revenues.
Macau finally had a respite from the 26 months of revenue contraction when its casino gross revenue rose by 1.1 percent in August 2016. Since then, Macau casino’s winning streak has continued until this month, albeit posting modest growth.
But many analysts are still managing their expectations on whether Macau gambling industry is back in business. For one, China’s corruption crackdown is still in effect. With the recent gains in the VIP segment, many still believe that China will remain on-guard.
There’s also the possibility that China will impose capital control. Credit debt-watcher Fitch Ratings earlier pointed out that China’s capital control may restrain Macau’s gaming revenue growth to a mid-to-high single digit.
Grant Govertsen of Union Gaming predicts that Macau will see a mid-single digit growth as he already assumes small declines in the VIP junket sector and 11 to 12 percent growth in its mass market.
“That being said, what we could see over the coming months and quarters are new regulations that might have negative impact on VIPs, hence our forecast for 2017 of a slight decline, whether it is a smoking ban, or some other, general regulations that don’t exist today that they could be thinking about maybe from a financial perspective could have a negative impact on the VIP,” Govertsen told CalvinAyre.com.
In order to sustain its growth momentum, Govertsen believes that Macau casinos should focus on marketing their offerings to the right persons and in the right areas, saying that those with the biggest focus on the mass market will be the biggest winners.
“So I think, it is exciting to think about what or how the growth could continue to build what we’ve seen in the past few months, as these operators start doing heavy duty marketing in mainland China from a mass market perspective,” he said.
Govertsen cited the case of the Parisian Macau, a newly opened outpost of Sheldon Adelson’s Las Vegas Sands gambling empire, which he described to be the most inventive of all the new properties in the former Portuguese enclave.
“The Parisian seems to really have hit the sweet spot and certainly, they have seem to have done their homework in figuring out what does the Chinese customers want. And clearly, there is an affinity of all things European, all things French, and all things Parisian,” he said. “Sands, more than any other operator, has hit the sweet spot. So I think, it is at least an example of the power of uniqueness and really something very diverse and new to the market.”
The Union Gaming analyst also believe that the best is yet to come for Macau as China’s Special Administrative Region hasn’t done enough experimentation to finally figure out how to go out and beyond casino gaming.
“You know, quite frankly, the experimentation is more or less still just in the beginning, rather than seeing tangible signs of success,” Govertsen said.