Macau's Economic Challenges Not Yet Affecting Its Stability
The six casino operators in Macau are expected to achieve 80% of their pre-pandemic EBITDA levels in the third quarter, as reported by Morgan Stanley. This could indicate that the gaming industry in the special administrative region hasn't been significantly affected by China's growing economic challenges yet. MGM China is predicted to perform exceptionally well, surpassing its pre-COVID EBITDA highs by 20%.
Morgan Stanley credited MGM China's success to its additional gaming tables, redesigned casino spaces, integrated food and beverage services, and RFID chips for a smoother customer experience. Rival operators are taking note and trying to copy these strategies.
MGM China operates two integrated resorts in Macau and is 56% owned by MGM Resorts International (NYSE: MGM).
High-End Customers Fueling Macau Casinos
Prior to the pandemic, VIPs were the primary drivers of gross gaming revenue (GGR) in Macau. However, data has shown that premium mass customers, who sit between high-rollers and mass-market players, are currently leading the recovery. There are hints that more high-rollers are returning to Macau as well.
This is advantageous for operators, especially those with large retail spaces rented to luxury brands, like Sands China.
"They claim that, similar to luxury sales in China, the top 1% of mainland Chinese are traveling and spending on entertainment," noted Morgan Stanley's analysts.
Economic Impact on VIPs
While the return of high rollers to Macau has been gradual, there are indications it's picking up in recent weeks. These gamblers may be fewer in number, but their average bet per hand is around $13,000, and they're less sensitive to economic changes.
This resilience and increased patronage is likely why Macau surpassed Las Vegas in GGR for the first half of the year, reclaiming its position as the world's top casino center.
Morgan Stanley also noted that house direct VIP business is "already above 2019 levels, and thus incremental VIP revenue should come from casual junkets."
Read also:
- Games Industry Research: Carbon Emissions of Top Video Games
- U.S. cities with the most Swifties per capita
- Blackjack Casino Advantage: How to Beat the Odds
- Football 101: What is relegation in football?
Source: www.casino.org
