Almost 75% of Macau’s total gross gambling revenue (GGR) will be generated from its mass market by 2025. Analysts opine that the mass market will fill the void left behind by lost VIP operations through more gambling expenditure per visitor, more rooms, and lengthier stays.
January 2022 saw Macau’s casino concessionaires register their results for the calendar year 2021. Despite the differences between the results, the incurred losses from the decline of junkets in Macau after the arrest of casino mogul Alvin Chau were a common theme.
Out of the six casino operators, four had suspended their agreements with junkets in Macau, after Chau’s arrest in late 2021. The operators formed a part of the rolling-chip fueled segment in the gambling industry that accounted for almost 30 percent of GGR in 2019. Heavy scrutiny and restrictions on gaming promoters after Chau’s arrest induced a decline in revenues, operators like MGM China noted.
2NT8 analyst Alidad Tash said that filling the $11 billion void left behind by junkets by other segments would depend on if China prohibits punters from entering Macau. Currently, there are rumors of China slowing down individual visit scheme (IVS) visas for Macau coupled with its crackdown on illicit money flows. Non-junkets need to grow by 5 percent since the GGR from junkets has already been transferred to the premium segment. For overall GGR to bounce back to pre-pandemic levels, the non-junket segment might be able to do so by 2029.
Eric Coskun of IGamiX Management and Consulting projected a similar analysis. Coskun said that the VIP segment will not return to its 2013-14 levels and that junkets will adopt their older, rolling commission model again. He speculated that Macau GGR will reach only $32 billion in 2025, compared to $36.1 billion GGR in 2019.
Tash was optimistic about Macau’s ability to support its mass segment given that more investment was aimed at fostering tourism in the city. He said that Melco and Galaxy’s expansion would add 5,000 more hotel rooms to Macau’s room supply which will amply support the increase required from its mass segment.
Coskun said that while tourism will return to the pre-pandemic mark of 40 million visitors annually, gaming spending per capita will hover around $800-$900 per customer, lower than the average of $1,500 in 2013-14. He said that Macau would need to build about 15,000 rooms in the 2 or 3-star range as mass-market visitors book rooms in Zhuhai due to insufficient and high-end accommodation in Macau.
Summary: Las Vegas Sands chairman and CEO Rob Goldstein is concerned about the impact of…
Summary: Tullis Gardens Hotel and the Tivoli development are in the works. The casinos would…
Summary: Rio Hotel & Casino has completed phase one of its multi-year property-wide renovation project.…
Summary: Monday’s TribalNet Conference & Tradeshow brought together gaming industry executives who discussed the future…
Summary: The Nevada Gaming Control Board addressed the shortage of armed casino security following the…
Summary: The Venetian in Las Vegas is getting ready for a massive dividend distribution. The…