On the cusp of a comeback

Gaming analysts predict that Macau gross gaming revenues in August could fall as low as 4 per cent year-on-year or register the first revenue increase in more than two years. Delays to the Pac On ferry terminal opening were considered to potentially have a negative effect on gaming growth.
According to Wells Fargo analysts’ estimates Macau gross gaming revenues might decrease 4 per cent year-on-year, with predicted average daily revenues (ADR) of between MOP580 million (US$72.6 million) and MOP600 million.
Bernstein analysts had a more positive outlook, stating that after the negative results registered in July ‘gaming volumes have recovered marginally for both VIP and Mass, and VIP hold rate continues to be above normal.’
Gaming revenue for the month of July fell less than analysts’ expectations for the period, dropping 4.5 per cent year-on-year to MOP17.8 billion, marking the 26th consecutive month of decline in gross gaming revenues for the MSAR.
However, Bernstein analysts consider that the month of August might register the first yearly increase in gross gaming revenues in more than two years.
Bernstein predictions for August are set between a 3 per cent decrease and a 1 per cent increase in gross gaming revenues, with an estimated turnout of between MOP18.1 billion and MOP18.8 billion. The analysts’ predictions consider that average daily revenues for August amount to between MOP580 million and MOP620 million.
Ferry terminal impact
According to Bernstein, the new Taipa Pac On ferry terminal will need six to nine months-worth of preparation work before it is operational, placing the estimated start date after February 2017 at the earliest and stretching to May of the same year
For the analyst firm any delays to terminal operation start could have a ‘negative factor in Mass gaming growth and migration to Cotai this year’.
The construction work on the new ferry terminal in Taipa has been completed and inspected, with the total cost coming in at MOP3.8 billion, while the government expects that it will open for service at the beginning of next year, Business Daily reported previously.
Table shuffle at Wynn Palace
With Wynn Macau Ltd. confirming it will transfer 250 tables from its Wynn Macau property to Wynn Palace after the Gaming inspection and Co-ordination Bureau (DICJ) allocated 100 tables readily available upon opening, gaming analysts don’t predict a significant impact upon gaming revenues.
‘We believe the impact on Wynn Palace will not be significant in the neart erm,’ Bernstein analysts stated, adding that a similar or lower table allocation to Las Vegas Sands’ The Parisian, opening on September 13, will also have ‘a small or even zero’ impact.
MGM Cotai
In the wake of statements by MGM China CEO Grant Bowie, who stated last week that he expects the company’s Cotai property to have no VIP tables when it opens in the second quarter of 2017, Wells Fargo believes that the new property will struggle to be profitable.
‘Lacking contribution from the traditionally lucrative VIP segment, MGM Cotai’s mass revenues will need to be strong enough to justify the property’s high fixed cost base, while at the same time contributing to earnings,’ Wells Fargo analysts stated.
Nonetheless, Bernstein analysts believes that the DICJ will grant MGM Cotai a table allocation of higher than 150 tables upon opening in 2017, with a possible increase in 2018.
Smoking ban impact
Wells Fargo addressed the recent postponement of the debate on the total smoking ban at the Legislative Assembly (AL) to October, predicting that the market will move to a full smoking ban in integrated resorts, a move they consider might ‘crimp VIP revenues by another 10-15 per cent when it happens’.