Mass-led recovery

The city’s gaming industry is on track to see recovery as visitor spending has started to rebound and high-rollers are converting to premium mass players, Deutsche Bank analyst, Karen Tang has commented.
“We learnt that gaming spend per visitor has started to rise, and VIPs are returning as premium mass players. We conclude that Macau is now at the start of a mass-led gross-gaming revenue recovery,” the analyst wrote in her latest note released Friday.
The brokerage’s head of Asia Gaming & Hotels said the conclusion follows the firm’s “extensive interviews with a dozen of casino service staff & premium mass hosts,” adding that she is seeing growth from both base mass and premium mass segments.
The Deutsche Bank analyst forecasts that the city’s mass gaming revenue growth will accelerate to growth in the low-teens – up by 10 per cent year-on-year in the second half of the year, and 12 per cent year-on-year growth for 2017.
The investment firm has also lifted its estimated EBITDA for the sector by 10 per cent to US$6.6 billion (MOP52.7 billion) for 2017.
In August, the city’s casino revenue rose by 1.1 per cent year-on- year to MOP18.8 billion (US$2.4 billion), ending a 26-consecutive-month slump.
Despite the fact that Secretary for Economy and Finance Lionel Leong Vai Tac noted recently that the start of the recovery would depend on the gaming revenue for this month, Chief Executive Fernando Chui Sai On said last week that the city has entered into “a relatively stable period” after “deep adjustments”.
Overnighters give a boost
Ms. Tang indicated that the accelerated growth in mass-gaming revenue is attributable to a trend of increased overnight visitors to the territory, especially Chinese visitors who are converting from day-trippers to overnighters.
“In the second quarter of 2016, Macau’s mass gaming revenue increased by four per cent [year-on-year], even though visitor numbers slipped by 0.5 per cent. This means gaming spend per visitor was up by five per cent, first growth since the third quarter of 2014,” she wrote.
The analyst noted that the growth in overnight visitors is important. “[It is] because spending per visitor is a bigger driver for mass gross gaming revenue than visitor growth,” the analyst said. “Longer stay means more play”.
Meanwhile, the conversion of high rollers to premium mass players is also speeding up revenue growth in the mass market.
“Our proprietary table count confirms the return of premium mass. The proportion of baccarat tables with over HK$2,000 minimum bet rose from 29 per cent of the mass floor in December to 36 per cent by July, with minimum bet rising prominently since July,” Ms. Tang indicated.
“We believe this player conversion can sustain premium mass growth for the next one to two years,” she concluded.