Inside Asian Gaming

INSIDE ASIAN GAMING | February 2013 10 COVER STORY little over 28 million. Interestingly, though, Union Gaming believes the official figures may be deceptive. Mr Govertsen says that if you factor out the decline in the number of so-called “transit visitors” (those holding visas for a third-party country) and the effects of last year’s crackdown by the PRC on mainland traders who cross and re- cross the border transporting goods from Macau for sale—and same-day visits from mainland China were down 6.3% in 2012, if that tells us anything—visitation from the mainland actually may have increased by 14% or more, by at least 2.4 million visitors, while visitation from all markets may have increased by 4%. What is certain is that the quality of the visits continues to improve. The number of overnight stays, a key indicator, rose 10% last year. Data available from the government’s Statistics and Census Service through the third quarter show spending per visitor up an average of 17%. Among mainland Chinese, historically Macau’s biggest spenders, the increase per capita was 19%. Here as well, the impact of the mass market has been telling, given the considerable proportion of mainlanders arriving on the government’s Individual Visit Scheme. Travelers on individual visas tend to be more affluent than the package tour crowd, or so it’s believed, and IVS visits to Macau were up 42% last year, an increase year on year of 8.2%. Neighboring Guangdong Province, the largest source of visitors, also was the largest source of IVS Travelers on single visas tend to be more affluent than the package tour crowd, or so it’s believed, and IVS visits to Macau were up 42% last year, an increase year on year of 8.2%. Neighboring Guangdong Province, the largest source of visitors, also was the largest source of IVS travelers at 67.2%. IVS yoy Change vs. Mass Monthly Revenue yoy Change Source: DSEC, J.P.Morgan calculations IVS Visitor yoy Change Mass Monthly Revenue yoy Change 100% 80% Correlation: 82% 60% 40% 20% 0% -20% -40% Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 travelers at 67.2%. Which makes sense, again, when you look at gaming revenue per visitor. This was up 8.8%, even working from UGR’s higher estimate of total visitation. Assuming two- thirds of table inventory was public (3,300 tables), average daily revenue per table in the mass market was up a whopping 29% versus 9.2% for the market as a whole and 3% for VIP. “As the combined high-margin business of mass market tables and slots continues to grow well into the double digits … the revenue mix shift should continue,” says Mr Govertsen, who expects that mass tables and slots will account for 35% of total GGR this year. Proportionately, that means an industry that will be at least 10% more profitable in 2013 in EBITDA terms than it was in 2012. Not a bad epitaph for the Year of the Snake. At current growth rates, looking ahead three to four years, Mr Fong estimates that mass will be contributing a full 75% of earnings. Feeder market—neighboring Guangdong Province is the largest source of visitors to Macau.