GOLDEN WEEK GAMING REVENUES DOWN 30 PCT

2014/10/9

From：Macau Business Daily

Analysts are revising October casino revenues, which could decline by 23 pct. For now – and despite the 6 pct increase in the number of tourists during the holiday – the gaming industry made MOP600 million less than last year… every day

Macau casinos suffered a 30 percent drop in revenues during Golden Week, despite the number of tourists in Macau reaching an all-time high of almost one million visitors, 6 percent more than last year. This contradiction indicates that visitors here are spending less (in time and money) in casinos and spending more elsewhere, such as on shopping, dining and entertainment.
According to the latest analysts’ estimates released yesterday, gaming revenues during Golden Week registered a record decline of more than 30 percent compared to the same period last year. Wells Fargo says revenues likely dropped 33 percent between October 1 and 5, while Sterne Agee, using a six-day range estimation (October 1 to 6), is anticipating a decrease of 30 percent.
Both companies attribute the drop to a lesser presence of high rollers and mass premium gamblers during this year’s Golden Week. The VIP segment generates more than 60 percent of all industry revenues here, and mass premium is a crucial engine for the most profitable mass segment. These wealthy players are assuming a lower profile in Macau or simply gambling in other destinations.
During last year’s Golden Week, casinos in Macau raked in a daily average of MOP1.8 billion in revenues. In 2014, the figure likely didn’t surpass the MOP1.2-1.3 billion mark, according to both investment houses. If predictions are correct, the gaming industry in Macau made MOP600 million less in revenues every day (or MOP3-3.6billion during the 5-6 days) during Golden Week compared to 2013.
Hong Kong protests during the recent public holiday also exercised a negative impact on Macau. ‘We believe Hong Kong’s Occupy Central protests negatively impacted quality of play early in October’, wrote Sterne Agee in a note to clients. ‘Many Mainlanders delayed or cancelled trips to Hong Kong in the wake of last week’s protests. Mainlanders often travel to Macau during their visit or holiday in Hong Kong’.

Tourist bonanza

Despite the lesser inflow of mainlanders, the tourism industry here saw a boom this Golden Week. Official data by Macau authorities reveals that in the first seven days of October some 901,000 tourists arrived in the territory, 6.1 percent more than a year ago.
With a softer Golden Week, investors quickly revised down their estimations for the rest of the month. Sterne Agee expects revenues to decline 18 to 23 percent year-on-year, while Wells Fargo assumes a more pessimistic tone with a drop of between 20 and 23 percent.
Both companies say, however, that October figures could be much worse. Wells Fargo estimates that revenues could drop 35 percent in the worst case scenario, while Sterne Agee admits a downside potential to its estimations.
The problem is that revenues normally fall hard after holiday periods like Golden Week. For example, the average daily revenues in casinos after last year’s Golden Week dropped by half (from MOP1.8 billion to MOP980 million). If the same happens this year, revenues from gaming tables in Macau will fall to MOP650 million daily for the rest of the month. Investors are expecting only a drop to a daily MOP850-900 million. Time will tell.

Copyright@Macau Business daily