Casino operators that play cards right will win from Beijing’s push to make Macau a family-friendly destination
- Analysts pick Sands China and Galaxy Entertainment as winners as they have proved the most successful so far at developing non-gaming offerings
- Operators are spending US$10 billion in developing family-friendly attractions amid warnings new licences will be linked to efforts to diversify
Macau’s casino operators have pledged billions of dollars to develop non-gaming attractions in a bid to secure new licences, but analysts predict only the more efficient like Sands China and Galaxy will be able to curb losses and emerge winners.
The spending frenzy comes as Beijing pushes to rebrand Macau as a family-friendly destination. Operators are ploughing US$10 billion into mostly non-gaming, which has traditionally been hard to monetise, before their licences expire in 2022 amid warnings new permits will be linked to efforts to diversify.
These expenses – together with slowing gambling revenues as a boom in new regional casinos lure Macau’s high rollers to places such as Vietnam, Cambodia and Russia’s Vladivostok – mean it will be tough for operators with poor efficiencies like SJM Holdings to promise high returns, analysts said.
A blanket 20 per cent return on invested capital for casino resorts, easily achievable in previous years, is no longer guaranteed, industry experts said.
“It will be the best and brightest gaming operators to be able to defend themselves,” said Grant Govertsen, managing director at research firm Union Gaming in Macau.