Macau’s gaming market rebounded in February after suffering its first monthly decline in more than two years.
The region’s Gaming Inspection and Coordination Bureau said Friday that revenue from the gaming enclave grew 4.4 percent in February, to $3.2 billion. Analysts credited high-end play over the Chinese New Year’s holiday week, but cautioned investors not to read too much into the results.
“The result, in our view, is benign with investor expectations ranging from a (1 percent to 6 percent increase),” Deutsche Bank gaming analyst Carlo Santarelli said in a research note. “If nothing else, the first two months of the year represent a stable beginning, despite fourth quarter concerns of turbulence lingering on the horizon.”
Macau’s gaming market rebounded over the last two years after an economic nose caused casino industry revenues to decline 36 percent. Analysts don’t believe the market is in for another major fall, but cautioned the country’s slowing economic growth and the China-U.S. trade war has prevented stronger gains.
Macau casino revenue fell 5 percent in January, the first year-over-year decrease since July 2016.
Jefferies gaming analyst David Katz said the opening last year of the Hong Kong-Zhuhai-Macau Bridge, that shortened the commute into Macau by more than 30 minutes, has helped visitation trends. The market saw a 26.6 percent increase in visitors over Chinese New Year.
“Combining January and February, the market has declined 0.5 percent against a tough comparison of 20 percent growth in the prior year,” Katz told investors. “While the revenue trajectory in 2019 has been relatively flat, the visitation trends have been accelerating.”
Macau gaming revenues grew 14 percent in 2018 to $37.6 billion, far below the market’s apex of $45.1 billion in 2013. Analysts speculated in January that Macau would have trouble in 2019 keeping up with the double-digit growth experienced over the past two years.
Union Gaming Group analyst Grant Govertsen, who is based in Macau, said March and April’s comparison will be tough to match, but he does expect flat to modest gaming revenue growth. He said the timing of Chinese New Year gave February a lift.
“Based on our on-the-ground observations, and given robust foot traffic trends, it appears that mass market came through for operators and growth of this segment likely remains in the low double digit,” Govertsen said.
Three U.S.-based companies – Las Vegas Sands Corp., Wynn Resorts Ltd., and MGM Resorts International – operate in Macau. Wynn has plans to add a non-gaming hotel and other entertainment components to a site next to the Wynn Palace on the Cotai Strip. Las Vegas Sands, which has five Macau complexes, is planning to convert one of its Cotai Strip developments into the Londoner, a British-themed resort.
Stifel gaming analyst Steven Wieczynski said the development projects “could disrupt market-wide business volumes.” Last year, he said, Macau benefited from the opening of the MGM Cotai in February.
“Looking out over the remainder of 2019, we continue to forecast gross gaming revenue growth in the range of 2 percent to 6 percent,” Wieczynski said. “By and large we expect the VIP market to deliver a relatively flattish to slightly down year-to-year comparison, with the mass market pacing growth for the market as a whole.”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
