Golden Week to propel casino revenue to new record in Macau

2013-09-26

Reading time 1:35 min

(Macau).- Deutsche Bank AG is predicting a bumper month for Macau’s casinos in October, forecasting record year-on-year growth in gaming revenue of us$ 4 billion (17 %). The bank says next week’s seven-day National Day vacation will help drive gross gaming earnings to a new monthly peak.

The seven-day national holiday, which begins October 1, was created to allow middle-class workers to travel to vacation destinations including Macau, the only legal casino gambling region in China, and the world's top gambling destination. During past Golden Week holidays, as many as 100 million Chinese have hit the roads for getaways.

A forecast by US brokerage Sterne Agee similarly predicts record-breaking casino gross gaming revenue next month. Analyst David Bain puts this down to an 8 % growth in hotel capacity, to the relaxing of restrictions on migrant workers, to improved public transport to Macau and to growth in capacity at the Gongbei border crossing. Bain has further stated that in the wake of Typhoon Usagi last weekend, there is pent-up demand likely to spill over into next month.

Analyst Karen Tang says 14 of the 17 hotels surveyed are fully booked between October 3-5, and that 13 are full for the first two nights of next month. Deutsche Bank predicts the ban on “zero fee” package tours that recoup costs by forcing tourists to shop in certain places or pay for compulsory excursions will reduce the number of “low-end day-trippers”.

Las Vegas Sands, MGM Resorts International and Wynn Resorts could get a big boost from Golden Week in Macau, adding another leg to a long run for casino stocks. Sands has said it wants to put more focus on midmarket gamblers like those who travel during Golden Week.

Sands shares rose fractionally in Wednesday afternoon trading to a multi-year stock market high. Wynn and MGM compete with Sands in Macau as well as Vegas, and could also get a lift from the holiday traffic. Wynn hit an intraday all-time high and was up 1% Wednesday afternoon. MGM was also at a multi-year high.

Hong Kong-based Melco Crown Entertainment (MPEL), a casino company that vies with its U.S. rivals in Macau, jumped 3% to 31.87, its highest point since going public in December 2006.

Elsewhere in the Leisure-Gaming Equipment group, ranked a superb 7 on IBD's list of 197 industries, Caesars Entertainment slid 6%. Caesars doesn't own any properties in Macau but is the largest US casino owner/operator.