In 2015, Deutsche Bank expects the Macau gaming industry to decline 8 per cent year-on-year in terms of Gross Gaming Revenue (GGR) terms. However, the pain of the Special Administrative Region will boost the Korean and Philippines gaming industries, according to yesterday’s report by the German bank. “Macau’s weakness creates opportunities for Korea and the Philippines. Weakness in big markets means opportunities for mid-sized markets as Chinese gamblers travel farther to try new destinations”, research analyst Karen Tang wrote. “For 2015, we expect Korean foreigners-only casino GGR to grow 16 per cent. For the Philippines, we expect new property openings to boost GGR by 33 per cent this year”, she said. In relation to the former Portuguese colony, Deutsche Bank says the first half of the year will be tough, to the point of registering a 21 per cent year-on-year fall. GGR will be dragged down, as happened in 2014, by the anti-corruption crackdown in Mainland China, junket liquidity problems, a stricter transit visa policy by the Central Government and the smoking ban. “We expect 2015 GGR to fall 8 per cent year-on-year to US$40bn, driven by a 9 per cent year-on-year decline in VIP and a 7 per cent year-on-year decline in mass. GGR will likely contract further in the first half of the year (-21 per cent year-on-year) as difficult debt collection puts pressure on junket liquidity”, the analyst forecast. However, the openings of Galaxy Phase II and Studio City will calm the negativity of the industry, boosting recovery to 7 per cent year-on-year during the second half. “With two new property openings in mid-2015, GGR should recover to 7 per cent year-on-year in the second half of 2015 as new hotel capacity releases bottlenecks on visitation and length of stay”, it was claimed. Despite the opening of the new casinos, the industry will be hurt by new challenges, such as increasing labour costs and competition, which will result in increasing marketing costs as operators fight for a larger slice of market share. The year of 2015 will be good in terms of market share for Galaxy and Melco Crown, which will happen due to the opening of the new casinos. Deutsche Bank predicts that this year Galaxy will own as much as 25 per cent of the market, while Melco Crown will achieve 17 per cent. On the opposite side, SJM Is predicted to drop from 23 to 20 per cent, Sands from 23 to 20 per cent and MGM from 10 to 9 per cent. Wynn should be able to secure the same slice of the market in 2015 as in 2014, which was 10 per cent. However, the bank forecasts that SJM will have to endure further suffering in 2016, while it waits for Lisboa Palace to start operating. Although SJM’s new project broke ground in February last year, the grand opening is only scheduled for 2017. This has led Deutsche Bank to forecast that SJM’s market share will further drop to 15 per cent.
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