Gaming operators should cater to all markets, analyst says

Margaret Huang

The continued growth of the region’s gaming revenue, accelerated by the VIP sector, should prepare investors for growth risks, a Bloomberg Intelligence Research analyst warned.

As the city has grown from a low period in 2016, and the anti corruption campaign has started to fade, affluent VIP gamblers are back in the region. The city has a variety of amenities to offer to them.

“With that growth comes risk. As an investor, you have to be ready for that bumpy ride ahead,” said Margaret Huang, a Bloomberg Intelligence Research analyst.

Speaking at the sidelines of G2E Asia’s press conference yesterday, Huang explained that although there is a healthy demand coming through the market, the city’s investors should be prepared for risks that may occur.

As Macau braces itself for gaming licenses renewal in 2020, the analyst noted that this year is a pivotal time for investors to consider further investments in the region.

“Some changes in terms of additional licenses or taking certain licenses away will certainly make an impact for some of the investors,” she explained.

Commenting on Steve Wynn’s lawsuit, the analyst noted that the case is not as impactful in Macau compared to the US, which suffered a direct impact as people associated him with the brand.

Conversely, in Asia, people know Wynn as a product and are less attuned to who Steve Wynn is.

Huang implied that the allegations against Steve Wynn would not affect the license renewal process.

“At the end of the day, it will be business as usual for Macau. Making those [license] allocations will really come down to what each operator can offer for them,” Huang told the press.

The analyst suggested that operators should know how to run business efficiently across the board – from high- end clients to low-end.

Huang cited Melco Resorts’ losses in the fourth quarter of last year as they opted to focus on the high-end market.

“They did get a little more share in the high end but now there’s more competition so that […] did not do enough to offset the losses in that share of mass market business. That really hurt them when you stack them up relative to the rest of the operators,” Huang said.

“It’s really key for every operator to make sure that every person they put in that room is of high value and to actually have the capacity to cater to the whole scope of business,” she added.

With Macau set to have more resorts and enhancements in the Cotai area until 2020 (including SJM’s Grand Lisboa Palace, Melco’s Countdown Tower, Sands’ Tower Suites and The Londoner) Huang hoped that the region will remain competitive to continually drive both investors and visitors.

“How do you stay competitive? That is the trick we have to decide. At what point is Macau going to be a steady growing market?”, asked Huang.