Parisian hard pressed to attract premium mass

The Parisian Macao may encounter difficulties in attracting premium mass gamblers after the property opens its doors on Tuesday due to its smaller hotel rooms, research house Morningstar Investment Management Asia Limited perceives. “We have some concerns that the smaller size of the hotel rooms of The Parisian would make it more difficult to attract premium mass players,” the group’s equity analyst Chelsey Tam wrote in a note yesterday. Four different types of room are expected to be offered at the new casino-resort property of Sands China Ltd. at 33 square metres, 47 square metres and 72 square metres, according to the note. But the analyst added that the gaming operator built these smaller rooms on purpose – in order to attract more spending on the retail and gaming sectors. “The group decided to build smaller rooms as their findings from surveys indicate Chinese tourists are more willing to spend money on shopping and gaming compared with rooms,” she wrote. The analyst reckons such a strategy by the gaming operator would indeed help attract traffic to the new property. “A lower capital expenditure per room means that more dollars are spent on the rest of the property, such as better ambiance, which should attract traffic,” she said. “It also means lower room rates, and with the same reinvestment as a percentage of theoretical win, The Parisian can provide more complementary services to attract patrons compared to operators with higher room costs,” the analyst added. The Parisian Macao, with 3,000 hotel rooms, was authorised 150 new-to-market gaming tables by the MSAR Government over the weekend. Of the total, only 100 will be available at the opening on September 13, while the remaining 50 will be available within the coming two years. Sands China has not announced whether it would transfer its current tables from other properties to the new project. Nevertheless, the Morningstar analyst estimates that the Group has at least 584 underutilised tables at the moment, adding that the lower than expected table allocation (by 100 tables) to The Parisian would not result in a negative impact upon the gaming operator. “Because Sands China opened more casinos in earlier days when table restrictions were less of a concern, Sands China has amassed the largest number of self-operated tables among the six gaming licence holders,” the analyst wrote. “And therefore is likely to have the highest absolute number of excess tables”.