Las Vegas still "blue chip" among global gaming markets - Fitch

"The Las Vegas Strip continues to be the blue chip among global gaming markets," says Alex Bumazhny, Senior Director, U.S. Corporates.

"Without any major new supply coming to the Strip through at least 2019, Strip operators will be able to take advantage of increased convention attendance, airline capacity and domestic gaming to drive RevPAR growth."

While Baccarat weakness has pressured operators with exposure to Asian gaming, overall gaming revenues on the strip are down just 0.6% year-to-date.

“

“

Longer term, openings of the $4 billion Resorts World Las Vegas and Crown's Alon Las Vegas should help to reinvigorate the Strip, ending a nine year dry spell since the Cosmopolitan opened in 2010

”

By contrast, Macau's gaming revenues have bottomed after a 44% cumulative decline since the peak reached in mid-2014. While recent openings of the Parisian and Wynn Palace raise the risk of cannibalization for existing operators, mid-single digit growth could be a reality in 2017 and beyond.

The mature U.S. regional gaming markets have the most challenging outlook due to a difficult demographic shift and competition from other entertainment and gambling offerings.

“

“

Low single-digit gaming revenue growth in early 2016 gave way to 0% YoY same-store growth in 2Q

”

Increasingly, individual regional markets are becoming more differentiated. As the Northeast ramped up, the Midwest passed its saturation point and low oil prices put a damper on the southern markets. While positive economic indicators are encouraging, these markets face long-term headwinds from a proliferation of gambling alternatives and uncertain retirement prospects for baby boomers.