High rollers rolled an all-time low percentage of Macau’s overall casino gaming revenue in January. Macau’s VIP gamblers traditionally account for between 65% to 70% of gaming revenue but January’s figure hit a record low of 60.6%. Telsey Advisory Group analyst Christopher E. Jones says January’s proportional decline is likely to continue throughout 2014, in part because operators were bent on reallocating VIP tables as more profitable mass market tables. High rollers accounted for around two-thirds of 2013’s record revenue haul but only a little more than one third of total earnings.
Macau’s January revenue was underwhelming to start with, recording ‘only’ 7% growth to $3.6b. It’s worth remembering that January 2013 was also considered a single-digit disappointment, yet Macau still managed to finish up 18.6% on the year. Last February, the hordes of lunar new year visitors were blamed for keeping away VIPs and this year’s crush was 13% larger than last year’s, so the VIP segment may take a while to bounce back. Thankfully, history teaches us that VIP pigeons eventually get homesick, as evidenced by last March’s record numbers.
Secretary for Economy and Finance Francis Tam Pak Yuen believes Macau’s overall gaming revenue will grow “in the low double digits” in 2014 and that mass market growth will continue to outpace the VIP segment. Speaking on the sidelines of last week’s Economic Development Council meeting, Tam said he expects the increased volume of mass market players will also benefit Macau’s non-casino economy through sightseeing and shopping.
However fast the pace of growth or the VIP share of the overall market, Macau’s future is so bright it needs to wear shades. This week saw Nomura Securities suggest Macau was presently serving somewhere between 1.4% and 2.1% of the potential mainland Chinese market, while a mature market’s penetration rate is considered to be closer to 25%. In other words, to be considered mature, Macau would need to increase visitation from the Chinese mainland by a factor of 12. If we were Macau’s infrastructure planners, we’d start building that teleportation machine pronto.
