Davis Fong calls on casinos to switch focus to foreign tourists
Casinos’ modes of operation should adapt to attract tourists from other places, gambling academic Davis Fong Ka Chio said on the sidelines of an event yesterday.
Fong said that with policy changes in the source market, local casinos should change their target from mainland tourists to those from other points of origin, adding that before the partial opening of the casino market, the city saw many tourists from markets such as Japan and Southeast Asia.
In the long term, he said, casinos should consider switching their focus or expanding their sources of clients, as far as the law permits.
On the topic of junkets, Fong pointed out that previously these establishments have had multifaceted operations, hinting that junkets will continue to operate in Macau. To achieve this, operators should react swiftly to market changes.
Illustrating his point, Fong said that a larger restaurant usually has both a main dining area and VIP rooms.
Questioned whether Macau will be affected by the lack of tourist arrivals from other source markets as the border remains closed to these tourists, Fong replied: “The pandemic will end someday.”
With the rumor circulating in the past month that Hong Kong may normalize its border with Macau, the academic suggests that the industry start promotions in Hong Kong. This would help compensate for the lost Southeast Asian arrivals.
Fong expects that mid-2022 will see gradual border normalizations with rising vaccination rates and the introduction of effective medication. He believes that in the long term, Southeast Asian tourists will return to Macau.
Fong is also confident that the gross gambling revenue will reach MOP100 billion in the coming year. “After all, mainland tourists have waited for external travel for quite some time already,” he added.
Up to date figures show that the government has collected nearly MOP31.28 billion direct taxes on gaming between January 1 and November 30, an increase of 15.1% compared to the same period last year. The figure is far from the government’s expectation of collecting MOP50.1 billion in direct taxes from the industry this year.
Bernstein: Junkets will ‘disappear’
Brokerage Sanford C. Bernstein implied in a memo yesterday that junkets will “disappear,” yet “players may well shift and we forecast that between 15-30% of junket VIP business could shift back to premium direct and premium mass and potentially more.”
Analysts at the brokerage noted that Sands China has had the least exposure to the VIP market at only 26%, whereas Wynn, Galaxy and Melco had higher VIP exposure at 49%, 48% and 45% respectively.
