International edition
June 22, 2021

Casino operators unfazed by competition

Floating casinos from Hong Kong stealing Macau gamblers

(Macau).- Visitors on the eight casino boats that leave Hong Kong each night rose 9 % to 615,328 in the first half of this year, aiding operators such as Success Universe Group and Genting Hong Kong. “The cruise ship can be a good substitute for mainland tourists,” said Hoffman Ma, deputy chairman of Success Universe, which doubled profits from its casino ship to us$ 277,000 in the first half of this year.

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uccess Universe shares rose 6.8 % in Hong Kong trading, boosting its gains for the year to 54 %. The benchmark Hang Seng Index climbed 1.5 %. The ships’ popularity shows how new businesses are profiting as Macau struggles to keep up with accelerating demand. The city, across the Pearl River Delta from Hong Kong, is half the size of Manhattan and drew about 14 million tourists in the first half of this year.

Packed hotels

Macau resorts, owned by companies such as Wynn Macau, Melco Crown Entertainment, and MGM China Holdings, run at close to full capacity. Rooms in Macau averaged us$ 175 a night in July, according to the government, while Bloomberg Industries estimates Vegas rates averaged us$ 108 last year. A room on a Hong Kong casino boat can cost as little as us$ 52.

While Macau is the only place in China where casinos are legal, the ships operate outside government control in international waters. Casino operators say they’re not worried about the competition. The casino boats offer little in terms of dining and shopping and do a fraction of the business of Macau’s gambling industry.

Their impact “is minimal,” Ambrose So, CEO at Asia’s largest casino operator, SJM Holdings, said in an interview earlier this month. “The pie is growing bigger and some money overflows there.”

Xi clampdown

Mainland tourists don’t need a separate visa to board the cruise ships once they are in Hong Kong, an added perk for affluent business people who want to stay under the radar. China’s President Xi Jinping last year launched an austerity and anti-graft campaign, warning that the enrichment of cadres and their families threatened the Communist Party’s grip on power. “Everyone knows that Macau is closely monitored by the central government,” CLSA analyst Richard Huang said in an e-mail.

Junket operators

Success Universe, which owns one ship that can accommodate 380 passengers, also leases it to Macau junket operators who help bring tourists on board. Success Universe also has a Macau resort called Ponte 16.

Success Universe’s boat and other Hong Kong ships leave port late each evening, open their casinos once in international waters, and allow patrons to gamble through the night. A big benefit is that the boats pay no taxes on their receipts, according to Success Universe, versus the 39 percent gaming levy paid on gross revenue by Macau’s casinos.

Macau’s growth has been beyond “everyone’s wildest expectations,” said Standard Chartered analyst Philip Tulk. Others in the industry have “seen how successful Macau has become and want a share of its mouth-watering casino revenue.”

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