ugust is headed toward a 15-month consecutive gaming slump and if current trends continue, it would be the second worst month in in five years.
Following a decade of unprecedented growth and reinvestment, an anti-corruption draft fuelled by China’s new government is killing the phenomenal success in Macau.
The six largest casino operators – Galaxy Entertainment, Melco Crown, MGM China, Sands China, SJM Holdings and Wynn Macau – have each seen a turnaround in their profits.
Macau’s declining revenues have weighed down on operators, with Las Vegas Sands revenue down more than 30pc in the second quarter and Galaxy Entertainment seeing a 66pc decrease in revenue for the first half of the year. Pressure continues as operators have committed a combined $20bn to open a new wave of casinos in the Chinese enclave.
Galaxy Phase 2 and Broadway Macau were the first developments to open as part of the new wave of casinos and the first large resorts to open in Macau for three years. Despite the Galaxy Entertainment reporting profits falling 66pc to HK$ 2bn (US$ 260m) for the first half of the year, the Company remains optimistic on shifting gears towards the mass market.
“With the expansion of Galaxy Macau and the opening of Broadway Macau, [Galaxy] is confident that the mass market focused properties will offer some of the most exciting and diverse amenities in Macau,” commented Galaxy in its statement today, “driving customer visitations and ultimately, substantial shareholder returns over time.”
The Company further explained that its new properties have failed to attract new junkets to VIP rooms in its new properties, which are causing the biggest impact on revenues. Analyst firm Daiwa remarked, “This underlines that there is no longer the pent-up demand from quality junkets for VIP tables/rooms that there was, say, 12-18 months ago.”
New properties set to open by every operator in Macau will focus on diversifying their offerings to include more leisure, tourism and entertainment amenities. Studio City, the next facility set to open this year, will be the first integrated resort in Asia to integrate film and television production facilities, as well as theme park rides, retail, hotels and a casino.