Casino ops to transition into Vegas, Singapore model: Macquarie
Macau casino operators are slated to transition to a Las Vegas Strip or Singapore model, a transformation which will focus on switching Macau from being a gaming to a non-gaming destination, according to analysts from the Macquarie Equity Research.
Analysts Linda Huang and Chad Beynon said, “We expect Macau’s gaming operators to transition to the Las Vegas Strip/Singapore model.”
Amid the gaming law overhaul last year, six casino operators pledged to invest a total of MOP118.8 billion ($15 billion) after being granted 10-year operating licenses, with the bulk of the money (up to 92%, according to the analysts) pledged to non-gaming projects.
Macau has been keen to diversify away from gambling and into tourism and leisure for some decades.
Fitch Ratings, earlier this year, forecast this transition to be a slow process, amid the operators’ moves in launching non-gaming offerings, citing human capital constraints and skill gaps posing a key challenge for Macau to substantially reduce its high dependence on the gaming industry.
In a report, analysts at Macquarie Equity Research stated “The operators are following the trend of Las Vegas and Singapore, where non-gaming revenue contributes to a significant portion of their overall revenue.”
Macau’s current non-gaming attractions have focused on retail and dining, with some entertainment offerings such as nightclubs, cinema, and concert and exhibition arenas.
However, it pales in comparison to Las Vegas, which boasts daily entertainment and draws an international crowd.
Challenges remain for Macau as it still lacks connectivity with international markets, infrastructure and a shortage of skilled labour.
According to the analysts, Macau’s gaming operators are expected to lower the percentage of their overall contribution derived from gaming from 83% in 2023 to approximately 40% and 68% of Las Vegas and Singapore, respectively.
Also, the analysts forecasted that the city’s gross gaming revenue (GGR) will return to pre-Covid levels in the fourth quarter of 2023. LV
