Macau Casinos Thriving: MGM China to Facelift Accommodation Areas
Following the lifting of China President Xi Jinping's "zero-COVID" policy last year, Macau's casino businesses have been steadily regaining momentum.
During a recent earnings call, MGM Resorts International CEO Bill Hornbuckle shared that the situation in Macau is quite promising, describing the business as "booming." MGM's subsidiary, MGM China Holdings, owns one of the six commercial casino licenses in Macau, a Special Administrative Region (SAR) of the People's Republic of China.
Hornbuckle stated during the call with investors and analysts that Macau's market is clearly on the upswing, as demonstrated by MGM China's record earnings before interest, taxes, depreciation, and amortization (EBITDA) for the third quarter. This period surpassed the third quarter of pre-pandemic 2019.
MGM China reported an adjusted EBITDA of HK$1.9 billion ($240 million) for the quarter. The company's casinos are outperforming the recovery of the rest of the market, as they have managed to reach their 2019 levels, while the other five operators are still at around 84% of their pre-COVID gaming.
MGM China's solid gaming performance during the third quarter has boosted its market share in Macau from 14.8% to 15.5%. The company is thriving in the mass and premium mass segment, which has become the dominant player demographic since the recent exodus of VIP junket groups.
"Results in Macau have been outstanding due to the ingenuity and execution of the MGM China team," said Hornbuckle.
The success of the third quarter has encouraged renovations at both MGM Macau and MGM Cotai. Hornbuckle informed analysts that "opportunistic changes" will be made to the casino floors to "maximize yield" and "cater to our mass and premium mass customers."
The renovation will also extend to the resorts' hotel rooms, which will be upgraded to better accommodate the increasing number of guests visiting the properties. MGM China's Q3 report showed that property visitation was 121% of the same period in 2019.
MGM China operates more than 2,000 rooms between MGM Macau and MGM Cotai. Along with the room renovations, Hornbuckle confirmed that MGM China will be constructing six new villas at MGM Macau.
In addition to casino operations, MGM China invested MOP16.7 billion (US$2.1 billion) as part of the new 10-year gaming license they were granted last year. The majority of this sum, MOP15 billion (US$1.87 billion), must be spent on projects unrelated to gambling.
Kenneth Feng, president and executive director of MGM China, expressed enthusiasm for the recovery in Macau and the diversification of the city. The company is concentrating on China's upper middle class as their target market.
"We are excited about the recovery in Macau, as well as the diversification of the city," said Feng. "We will continue investing in the gaming floors to enhance table yield. At the same time, we're dedicated to creating more unique integrated tourism experiences to entice international visitors."
During the earnings call, Hubert Wang, MGM China's chief operating officer, addressed concerns about potential economic pressures affecting Macau's recovery. Wang asserted that higher-earning mainland residents, who make up the majority of Macau's demographic, are faring well.
"China's GDP growth is around 4% to 5%, but we cater to the upper middle class. The spending differences between high-income groups and the base mass are significant," Wang explained. "You see continued growth in luxury goods for high-income earners, while the mass market has witnessed a decline. I believe Macau is primed to serve this high-spending demographic, which is a goal that the concessionaires and government are pursuing."
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Source: www.casino.org
