An employee directs passengers to board a shuttle bus for Galaxy Macau casino resort
The Wall Street Journal predicts that the gaming situation in Macau is set to deteriorate further in 2016, due to an oversupply of gaming resorts and dwindling demand, which saw room prices in the MSAR fall by 17.8 percent in November 2015 compared with a year earlier.
Opinions on when, and if, Macau’s gaming sector will make its long-anticipated recovery vary greatly, with some analysts predicting that 2016 will mark the end of the city’s five-year slump, while others insist that revenues could remain disappointing well into next year.
The WSJ says that the demand for gaming facilities has fallen due to institutional factors that the opening of new casino-resorts will not alleviate.
China’s slowing economy, combined with a corruption crackdown, has kept the high rollers away, it says.
In contrast to bullish investors, who have posited that the high occupancy rate in Macau indicates a bottleneck in supply, some are suggesting that the new wave of resorts opening in Macau is driving down room prices and occupancy rates, thus impacting profitability.
Room rates dropped by 17.8 percent in November 2015 when compared with a year before, while the WSJ reports that hotel occupancy rates are also declining.
The market impact may be heightened this year as Sands’ Parisian, the Wynn Palace and MGM Cotai add another 6,200 new rooms to the supply, which is expected to draw some demand away from existing resorts.
Those who have placed their hopes in non-gaming elements may also be disappointed, the WSJ notes, as Studio City’s opening did little to stymie the decline in gross gaming revenue.
Macau’s gaming resorts seem to lack the same “pull” with mass-
market gamers that they once had with the VIP segment. Coupled with the fact that Macau’s brand is not quite – or at all – associated with family-friendly tourism, 2016 may not bring the recovery that many are eagerly awaiting. Staff reporter
Macau has to look to Las Vegas, whose dependence on casino revenues has declined from over 70% to around 35%. With their number of rooms, they should be able to attract more convention type business, that has had such an impact on Vegas. And Macau has LV Sands and Sheldon Adelson, who specialize in the MICE trades. If Asia’s meetings are like the US, these type events are primarily mid week, when the casino/hotels are most in need of overnight demand.