MGM Resorts International Chairman and Chief Executive Officer James Murren said in an interview that he doesn’t see stability in China in the near future.
“I don’t think that volatility is going away near-term,” Murren said in an interview on CNBC this week. “This year is uncertain.”
Last year, Macau gaming revenues fell for seven straight months, leading to an annual decline of 2.6% to MOP352 billion. MGM saw its revenue dropped by 22% in Q4 2014—a decline generated from a 39% drop in VIP gaming activity.
Murren, on the other hand, is still confident of Macau’s long-term potential despite VIP business suffering from China’s corruption crackdown.
Macau’s mass casino traffic up in CNY; VIP remains weak
According to data from the city’s Public Security Police, total tourist arrivals to Macau during the first three days of Chinese New Year were up 3.4% year-on-year to 434,549.
The Macao Government Tourist Office’s website said that 70.9% of the visitors, including foreign workers and students, came from mainland China—an increase of 6.9% year-on-year.
“This is the first time, in our view, that mass and premium mass casino floors have felt busy since October’s Golden Week,” according to Grant Govertsen and Felicity Chiang, analysts at Union Gaming Macau Research Ltd. “Not only have casinos felt busy (very few empty tables), but we have noticed a general – although muted – increase in mass and premium mass minimum bets.”
Analysts at Credit Suisse AG believe the “decent” traffic in the first days of the holiday period will not be enough to prevent a sharp drop in casino revenue this month even to offset a weaker VIP. “VIP and premium mass are quite weak: This is consistent with our earlier finding that advanced booking for junkets was weak and tight capital and low risk appetite in money extension have hurt demand,” said analysts.
February gaming revenue in Macau is expected to fall 45% year-on-year
Macau govt. to limit number of mainland tourists
Secretary for Social Affairs and Culture Alexis Tam Chon Weng announced that Macau plans to enforce a limit on the number of mainland tourists that visit the city, due to overcrowding at Macau’s borders and main tourist spots during the Lunar New Year festive season, which started on February 19.
Macau casino operators are investing billions of U.S. dollars into new projects that focus on the mass market and introduction of a mainland visitation cap is likely to pose increased challenges to the gaming industry, limiting the potential for mass-market growth.
