Across The Border | Macau’s gaming industry set for recovery in 2017, says S&P

2017 will be a recovery year for Macau’s gaming industry with gross gaming revenue (GGR) expected to grow by as much as 10 per cent next year, according to S&P Global Ratings.

The city has seen a year-on-year rise in GGR for three consecutive months after 26 months of decline. The rebound from recession in the casino industry coincides with the opening of two new resorts, Wynn Palace and Sands’ Parisian, which are helping draw recreational gamblers to Macau.

S&P Global Ratings credit analyst Sophie Lin said the new casinos will drive gaming revenue growth. “New casinos will add non gaming attractions and hotel rooms, both of which should help attract mass-market gamers to Macau,” said Lin. “Cannibalisation could occur between new and existing casinos, but we believe the worst is behind the industry.”

Wynn Palace and the Parisian Macao added about 4,700 hotel rooms to the city and hotel occupancy rates have resumed their year-over-year improvement since June 2016, staying above 80 per cent despite the substantial increase in rooms, according to S&P data.

Better infrastructure will be another growth driver, said Lin. Transport links connecting the Chinese mainland and Macau would boost visits by recreational gamblers, especially after completion of major projects such as the Gongbei Border expansion in 2018, and the Hong Kong Zhuhai Macau Bridge and Macau light rail in 2019.

Karen Tang, research analyst at Deutsche Bank, was also bullish on the gaming industry’s performance next year, expecting mass GGR growth to reach 12 per cent on the back of the return of the premium mass segment to Macau.