Be ready for a battle royal, as Macau gambling giants unveil latest attractions

Major players jockey for position, with city hoping to lure a wider audience to both its gaming tables and its tourist attractions

PUBLISHED : Sunday, 28 August, 2016, 7:41pm
UPDATED : Monday, 29 August, 2016, 1:38pm

With the imminent openings of the Wynn Palace and The Parisian Macao, experts now expect a battle royal for market share among the six biggest casino operators which dominate the world’s top gambling hub.

Much has been written in recent months about whether casino magnate Steve Wynn, or his Sands China counterpart Sheldon Adelson regret their moves to invest millions in the two new ventures. The Wynn Palace opened last week and The Parisian is expected to launch in September.

In recent years punters have stayed away from Macau’s gaming tables in their droves, after the Chinese government clampdown on excess spending spilled over into high rolling at Macau’s top venues.

Both companies, however, have maintained that their investments are perfectly timed, as they are set to focus on not only mass-market and high-spending VIP customers, but also offer a wider tourist experience, in line with Macau’s hopes of being associated with a lot more than just spinning roulette wheels.

The timing of the openings may also prove a bittersweet experience for Macau casino tsar Stanley Ho Hung-sun and billionaire tycoon Lui Che-woo, whose own properties are expected to benefit from more holidaymakers travelling to Macau, but also lose at least some of their shine to the two dazzling brand-new destinations.

“[The outperformers] ought to be the two operators that are bringing new supply online, namely Wynn Macau and Sands China.

“Even if they don’t grow market share, they will be market-share takers,” said Union Gaming analyst Grant Govertsen.

Wynn Macau has just posted upbeat earnings for the first half of the year, while Sands China also shrugged off disappointing figures for the same period to climb the most in four months following Adelson’s remarks that signs had started emerging of a Macau gaming turnaround.

Some other market watchers have also pinned high hopes on the two projects sparking a solid rebound in Macau’s gross gaming revenue (GGR), in the belief that their mass- and premium-market appeal will position them well to take full advantage of the overall visitation growth being enjoyed by the former Portuguese colony.

The anticipation of the openings have spurred months-long rallies for Macau’s gaming plays, with analysts such as BNP Paribas’ Gabriel Chan projecting that GGR, which has contracted for 26 straight months, will return to modest growth for August and September.

[The outperformers] ought to be the two operators that are bringing new supply online. Even if they don’t grow market share, they will be market-share takers
Grant Govertsen, Union Gaming analyst

“That’s a very critical period for the markets to gauge the overall wellbeing of the gaming industry, and we are going to see premium resorts such as Four Seasons Hotel Macao and City of Dreams come under pressure from additional supply from Wynn Palace,” said Morningstar equity analyst Chelsey Tam. “[Lui Che-woo’s] Galaxy Macau is also not immune.”

Four Seasons Hotel Macau is also run by Sands China, while City of Dreams is managed by Melco Crown Entertainment, chaired by Stanley Ho’s son Lawrence Ho Yau-lung.

“Melco Crown faces the most serious challenge over the next several quarters ... [It] will have its hands full trying to defend against market share losses to Wynn Palace, not to mention Parisian Macao, and then MGM Cotai next year,” said Govertsen.

While casinos on Macau’s popular Cotai Strip will further bite into the market share of those located in Macau Peninsula, major gaming operators in the peninsula such as MGM will be engaged in a fight to win gamblers from SJM’s flagship Grand Lisboa, Tam reckons.

“MGM is more competitive, owing to its strong sales force, marketing analytics as well as leadership… while it is nearly impossible for SJM to maintain market share against such a fierce competition,” she added.

SJM, owned by the family of Stanley Ho, posted dismal first-half results as it continued to grapple with plunging gaming revenue in its VIP rooms, while MGM China, co-chaired by Ho’s daughter Pansy Ho, saw a stellar performance for the same period.

The two are the only casinos with their main operations based in Macau Peninsula.