Inside Asian Gaming

inside asian gaming JUNE 2015 12 Partner Grant Govertsen says. “We seem to have stabilized at his new low of MOP19-20 billion [monthly gaming revenue]. “There’s risk to both the downside and upside from here,” he says. “In a political context, I’m not sure there’s any more pain that can be presented. I don’t think things can get worse by mainland policy. A full smoking ban represents the biggest regulatory risk.” Elaborating on upside risk, Mr Govertsen says there have been three major legs down for VIP revenue, May-June last year, September-October and February. “Whoever feels they’re at risk has selected themselves out of the market,” he explains. “Has the VIP market permanently changed? Probably. The first leg down presumably is lost permanently. The second and third group probably represent people who have nothing at risk in terms of corruption but are fearful in this environment. Those groups will probably come back once some kind of comfort level is found,” Mr Govertsen says. “That could happen as quickly as they left. If you’ve got a sell rating on the stock, you’re not going to see that coming. It could happen next week, it could happen a year from now.” Mr Govertsin full believes that gaming revenue will repeat previous V-shaped recoveries, but he warns against looking for a turning point. “There won’t be any sign. It’ll happen quickly,” he says. “It may trickle back before it explodes back. Our contacts in VIP and Feature In Focus “China is a father, Macau is a son. China cares a lot about Macau,” Morgan Stanley Asia Gaming Research Head Praveen Choudhary says. “The son is addicted to Chinese visitors and gambling, and that’s not good. premium mass say there’s pent up demand. They want to visit, to come back. Suddenly it will be MOP 23-25 billion a month.” Mr Govertsen thinks the lack of new resorts has hurt visitation, “I used to live in Las Vegas. Every time I go back, there’s something new and different. Macau has been the same.” Growth in Chinese travel to Korea and Japan partly reflects Macau’s absence of openings, he says. Even without a VIP recovery, he sees mass demand filling new hotel rooms. “Studio City could reinvigorate demand in a normal environment,” he says, but Macau 2015 is a different era compared to previous openings. Along with the market malaise, he cites temporary issues related to the project, including “construction disruption” from Parisian next door cutting Studio City off from the rest of Cotai and light use of the Lotus Bridge border crossing adjacent to the property. He also notes, “Melco Crown owns 60% of Studio City, so it’s better to drive business to City of Dreams with 100% ownership.” Mr Govertsen says, “By 2016, maybe something will have changed on the demand side with new, more compelling properties. Then it can reinvigorate the market.” But creating lasting mass-market growth isn’t just about new resorts. “Value for money on non-gaming needs to change. It’s changing and needs to change,” he says. “Resorts in Macau are terrific, but they don’t have the same sizzle as Las Vegas,” Mr Govertsen says. “With more resorts, they’re getting better. But Macau needs to become number one in casino resorts.” Editor at large Muhammad Cohen also blogs for Forbes on gaming throughout Asia and wrote “Hong Kong On Air,” a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie. “Clearly the turnaround has not happened yet,” Union Macau’s Managing Partner Grant Govertsen says. “We seem to have stabilized at his new low of MOP19-20 billion [monthly gaming revenue].