Macau’s 2Q26 results season has wrapped up and once again the biggest topic of discussion across the operator earnings calls was the competitive operating environment and how this continues to weigh on margins.
Needless to say, this intense competition between the city’s six concessionaires in the post-junket era isn’t going to slow anytime soon. With the highly lucrative “premium mass” customer now the industry’s primary focus, but only a limited pool of such customers to draw upon, there will continue to be plenty of metaphorical blood spilled in the race to gain valuable market share.
What has caught my attention in recent quarters, however, has been the growing number of references to “rational” spend. That is, where do operators draw the line between investing in the best product offering possible and simply spending whatever is needed to take from their competitors?
Particularly interesting was a reference by Melco Resorts to a more rational calendar of events in the coming months, with Chairman and CEO Lawrence Ho outlining his view that some operators had been too eager to host major events on the same weekends, making it difficult for them to be profitable. There was, he observed, a 50% drop-off in scheduled events from event leaders Galaxy and Sands in the second half of 2026.
Melco, Ho added, is “focused on being disciplined as we align our resources with the highest return opportunities and protect the guest experience.”
The challenge today is that, without junkets looking after offerings like hotel rooms and player logistics, concessionaires are having to provide those services themselves, meaning the cost of doing so is significantly higher than it used to be. More importantly, because the junkets aren’t funneling players to their many VIP rooms as they once did, concessionaires are competing on product and service quality to determine where those premium players end up. The result is more hosts, more suites, more inducements and a grander presentation all round.
The only real winner right now are the agents raking in massive commissions on play. IAG also understands that concessionaires are openly stealing players from rivals with offers of free play and more, meaning the original operator has no choice but to up the ante even more just to bring that player back. This ultimately squeezes margins even further.
It is under this intense fight for patronage that the amount invested into the offering can become “irrational.” And even then, there may be disagreement between the concessionaires as to what is reasonable and what’s not.
Wynn, for example, insists its investment has been “relatively stable” in recent quarters following the recent launch of its new Chairman’s Club. Galaxy cited its intention to maintain a “disciplined reinvestment strategy” that protects margins. Melco revealed plans to review its promotional spend and focus on areas with the greatest “guest impact” while cutting investment in others.
As for MGM China, a company that some have in the past pointed to as having led Macau’s aggressive reinvestment approach post-COVID, CEO Kenneth Feng said his goal was simply to provide the best package offer for his premium customers, combining products, services, innovation and promotion.
It all sounds about as “rational” as we are going to get.
