Macau casinos celebrated a grim milestone in May as gaming revenue fell for the 12th consecutive month.
According to the city’s Gaming Inspection and Coordination Bureau (DICJ), casino gaming revenue fell 37.1% last month to MOP 20.35b (US $2.55b), roughly in line with analysts’ expectations. This marks one full year since Macau posted a revenue gain, underscoring the brutal effectiveness of Beijing’s clampdown on corruption among public officials.
Highlighting how bad things have become in Macau, reaction to May’s decline has largely been relief that it wasn’t worse. Casino concessionaires and their investors continue to hope that the now somewhat stable rate of decline means that, while a recovery is not expected anytime soon, perhaps some kind of bottom has been reached.
On an individual basis, Sands China held the biggest slice of May’s gaming revenue market share at 26.5%, up 2.3% from April. SJM Holdings ranked second with 21.8%, while the other four operators finished as follows: Galaxy Entertainment Group (18.5%), Melco Crown Entertainment (14.3%), Wynn Macau (9.9%) and MGM China (9%).
Macau’s gaming slump has dragged down a host of other figures, including the special administrative region’s gross domestic product, which fell by one-quarter over the first three months of 2015. By comparison, the woeful Greek economy took six years to achieve the same rate of decline. The Macau government’s fiscal surplus fell by half in Q1 and Macau retailers reported a 31% decline in sales of luxury goods like watches and jewelry.
Over the first four months of 2015, Macau’s number of hotel guests has fallen 10.4% and occupancy rate is down 7.3 points to 79%. Interestingly, hotel guests from mainland China fell 12% while those from Hong Kong and Taiwan rose 10.9% and 8.6%, respectively. Those traveling to Macau for MICE (meetings, incentives, conferences and exhibitions) events fell 12.8% in Q1.
The recent opening of Galaxy Macau’s Phase 2 has yet to offer any indication that new gaming options have the capacity to boost the overall market. Deutsche Bank AG analyst Karen Tang issued a report on Monday saying Phase 2 was expected to add up to MOP 720m per day to the overall revenue figure but the property failed to achieve this sum during its opening week, raising doubts about the property’s ability to restore some luster to the overall market in the near-term.
Other analysts aren’t quite ready to give up on Galaxy’s new digs just yet, claiming it’s too early to write any obituaries. Union Gaming’s Grant Govertsen felt that Phase 2 would do well for Galaxy Entertainment, but it would be “more of a share taker than a market grower.”
But Tang also quoted junket operator agents saying their VIP customers were “not particularly excited about the new casinos in Macau.” Instead, VIPs are continuing to explore casino options in other Asian jurisdictions, particularly in Manila, Vietnam, Cambodia and Australia.
