Inside Asian Gaming

inside asian gaming October 2016 4 It always helps to have a second opinion www.asgam.com M acau is back! Okay, so perhaps I’m getting a little bit ahead of myself there. Latest figures from the Gaming Inspection and Coordination Bureau show that Macau’s gross gaming revenue for September grew by 7.4% year-on-year, the second consecutive month of growth after August recorded a 1.1% year-on-year improvement. Taken in isolation, two months of growth is nothing when compared to the 26 consecutive months of decline that preceded it. It’s certainly too early to be popping champagne corks. But it does indicate that the Macau gaming industry’s recovery is now well and truly underway. And it certainly suggests August’s result was no anomaly, as was claimed by some at the time. It is understandable that a rise of just 1.1% was treated with some scepticism although as I noted last month it was, at the very least, a positive psychological result. It was a number in the black, so irrespective of the quantum it provided a psychological difference for people in the industry. But 7.4% isn’t psychological – that’s a real number. That’s real year-on-year growth. So now we’ve got a psychological number and a real number to back it up. As a result, Macau also saw quarterly GGR grow for the first time since the second quarter of 2014, rising 1.2% to MOP$55 billion from 1 July through 30 September. There are some obvious reasons for this, namely the opening of new supply via Wynn Palace and The Parisian. Nevertheless, there is also plenty of reason for optimism moving forward, including the fact that September’s impressive results just happened to lead straight into the October Golden Week holiday. In particular there is reason for Sands China to feel good about life right now, with The Parisian performing strongly so far and providing an extra 3,000 hotel rooms for visitors. According to Union Gaming analyst Grant Govertsen, “We believe that Sands China heavily marketed The Parisian into mainland China in advance of the opening and our observations across Cotai this past month would suggest this has paid dividends for the company as its central cluster has consistently felt busy. “This is backed up by conversations we’ve had with our contacts on the ground. While room rate surveys have shown that rates across all of Macau and Cotai are down year-on-year and remain at bargain levels … we think the discounted room story is actually driving incremental customers to the market – another advantage for Sands China given its dominant amount of room inventory. September’s GGR story reinforces our view that Sands China and Galaxy Entertainment are the best ways to play Macau’s nascent recovery given their outsized exposure to the mass market.” September’s GGR of MOP$18.4 billion is still a long way from the record MOP$38 billion Macau achieved in February 2014, but at least it is finally headed in the right direction. Ben Blaschke We crave your feedback. Please email your comments to [email protected] . Editorial