The premium mass market is expected to remain the biggest driver for the city’s gaming operators in 2022, given the increasing number of luxury hotels in the upcoming year, according to Morgan Stanley.
With the upcoming openings of Grand Lisboa Palace and Raffles at Galaxy – which offer 2,000 and 700 rooms respectively – and The Londoner’s 970 rooms converted from The Holiday Inn, the brokerage’s analysts are expecting the region to be positioned for a recovery.
“Macau will look and feel different in 2022 when compared to the pre-Covid world,” analysts Praveen Choudhary, Gareth Leung and Thomas Allen stated in a report issued yesterday.
With the overall room capacity in Cotai increasing by 13% in 2022 compared to 2019, the brokerage added, “These customers come to Macau and expect high-end hotels, free entertainment and F&B amenities. Companies with better hotel products (such as the Ritz Carlton and Morpheus) have done better [with] premium mass business historically.”
In terms of the VIP sector’s revenue contribution to the region’s GGR this year, the analysts noted, “We expect VIP to contribute around 25% of total GGR in 2021 and beyond. This compares with 70% in 2012. With VIP being de-emphasized, we are looking at mass revenue, which has been on a structural growth path.”
Earlier this year, Morgan Stanley has lowered its projected tally for GGR by around 10% to nearly USD23.7 billion, owing to the strong headwinds against the VIP gaming sector.
The financial firm forecasts that the receipts from the VIP sector in 2021 to reach only 40% of 2019 levels. It also previously noted that it does not expect the figures to rebound to 2019 levels, even in 2022. However, the mass market may perform better than the VIP sector, with its 2021 revenue expected to generate around 80% of 2019 levels.
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