VIP BET PAYS OFF FOR GALAXY

2014/10/8

From：Macau Business Daily

Galaxy came out of September as the market share leader of the casino industry here. Grant Govertsen, an analyst with Union Gaming Research, told Business Daily that the group’s strategy is working and that the company will be able to retain this position for the time being

For the first time ever, Galaxy has managed to occupy the first place in terms of market share in the Macau gaming industry. The company founded by Lui Che Woo achieved 22.9 percent of the gaming market, as it focused its energies in the VIP segment, Grant Govertsen, an analyst with Union Gaming Research, explained to Business Daily.
“In all likelihood, the reason that Galaxy would have come out on top in terms of market share is their VIP performance. In general, Galaxy has been growing its VIP business while all other operators have experienced notable declines (up to 25 percent) in their VIP business”, he said. “As a result, Galaxy would move to the top market share in terms of revenue. It is entirely due to the fact that Galaxy is the only operator (of the six concessionaires) that is growing its VIP business”, he added.
In the race for the leadership, Galaxy overtook Sands China (21.8 percent), which ranked second, and SJM (20.9 percent), which achieved its worst position ever in terms of market share. So far, Sands China and SJM have been the only other concessionaires to sit at the top of the ranking.
The Union Gaming analyst expects Galaxy to hold its position as market share leader in the future. However, as the VIP segment recovers, the fight for leadership will enter another level.
“For the time being, yes, we would expect Galaxy to likely retain its top market share of revenue position. However, when the VIP business recovers, I think you will see Sands, SJM and Galaxy all vying for the market share leader position”, Mr. Govertsen said.
In the opinion of Grant Govertsen, Galaxy has the edge, as Phase 2 of Galaxy Macau will begin operations in early 2015, which will increase the number of gaming areas of the company.
“Looking ahead, Galaxy has the unique advantage of being the first operator to open its new casino on Cotai. This should be advantageous for Galaxy, especially if the VIP market recovers in a meaningful way in early 2015. That would dovetail nicely with the large amount of supply Galaxy will bring online”, he said.
As for the gaming operators in the fight for the top position, Sands China is targeting opening the Parisian in late 2015, in spite of construction delays. As for SJM, the Lisboa Palace is slated to open during 2017.
Although there are good reasons for Galaxy to be optimistic, the effects of the new smoking ban law have yet to be seen. As for last Monday, when the regulation came into effect, the operator had only working smoking rooms on its gaming floors in StarWorld Hotel. The Galaxy Macau, which generated the largest slice of the revenue in the first half of the year (HK$25 billion vs. HK$12.3 billion from StarWorld), is still waiting for its smoking rooms to be operational.
However, Grant Govertsen stressed to Business Daily that more important than the market share is profitability. In that arena, he said, Sands China is leading the race.
“It’s important to point out that it’s not the same thing as profitability. We would argue that in terms of market share of profit, Sands China would still lead the market by a wide margin”, he stressed.

Copyright@Macau Business Daily