Around 1.06m visitors traveled to the Asian gambling enclave of Macau for the National Day Golden Week holiday, according to figures released by the Public Security Police. The total was a 7% increase over the previous year, with 206k visitors arriving on Oct. 2, the busiest day. According to analysts at Sterne Agee, Macau’s gaming table revenue came in at US $1.1b during the week of Oct. 1-7, with SJM Holdings leading all operators with a 26.3% share of the takings. Galaxy Entertainment was second with 21.2%, followed by Sands China with 20%. Melco Crown Entertainment’s share came in at 14.1%, while MGM China and Wynn Macau were neck and neck with 8.9% and 8.8% respectively.
Factoring in the Golden Week results and using the daily average revenue recorded over the past three months as a guide, Sterne Agee expect October’s total revenue tally to come in at $3.51b. That would be both a 7% gain year-on-year and a new monthly revenue record for the world’s top gambling jurisdiction. Looking further ahead, Union Gaming Research Macau is projecting growth in the mid-single digits in the fourth quarter. According to the director of Macau’s gaming regulatory body, year-to-date growth is currently standing at 14.9%, which is a far cry from 2011’s 42.2%, but definitely nothing to sneeze at.
Sterne Agee’s David Bain believes that the increasing clout of the mass market segment means those operators “with the highest weighting to mass and exposure to Cotai should outperform.” A recent HSBC study made a direct correlation between China’s GDP growth rate and Macau’s VIP gaming revenue. As China’s GDP slows, there’s a corresponding drop in the amounts VIPs are willing to drop at the gaming tables. But the mass market, which is growing at a rate of around 30%, shows little sign of slowing down.
Even better, unlike with those VIP whales, casinos don’t rely on junkets to bring in the minnows, so they don’t have to split the take with anybody. As a result, the mass market is estimated to be up to four times as profitable as the VIP segment. Galaxy CFO Robert Drake told the Asia Times that VIPs account for 70% of his outfit’s revenues, yet Galaxy derives an equal amount of profit from its mass market customers.
Gaming Market Advisors’ Andrew Klebanow believes “the properties with large numbers of hotel rooms are best positioned to service the mass market. Heads in beds leads to bodies in the casino.” That bodes well for operators like Sands China, which will offer a total of 9,000 hotel rooms across its Macau properties once all the phases of Sands Cotai Central are completed early next year (and 3,000 more once its Parisian resort is completed). Wynn Macau’s Cotai project is slated to feature 2,000 rooms, while Galaxy Macau’s second phase will add 1,300 rooms. It certainly appears that for operators with a focus on the mass market, every week could be golden.