HONG KONG: Macau casino revenue plunged a record 49 percent year-on-year in February as China's corruption crackdown took its toll, but more mass market visitors lured by new mega-hotels could stem the free fall later in the year.
It was the ninth straight month of decline as Beijing encourages the semi-autonomous territory to diversify away from gambling and reins in high rollers from the Chinese mainland.
February revenue fell to 19.54 billion patacas ($2.45 billion), compared with 38.01 billion patacas for the same period last year, according to figures from the former Portuguese colony's Gaming Inspection and Coordination Bureau.
The previous highest year-on-year drop was 30.4 percent in December, and an overall fall of 2.6 percent in 2014 was the first annual decline since figures were first released in 2002.
"With all the current policies from China and the changing sentiment in Macau, we were not expecting the main driver for revenue to improve," Simsen International Financial Group associate director Jackson Wong told AFP.
"A lot of people have lost faith in the sector and that's why it has plunged."
But Wong said that revenue may stabilise and even improve in the coming months as Macau taps in to mass market visitors where it has previously relied on big spenders.
Despite February's revenue drop, the figure was slightly better than expected, said Wong, and prompted Macau casino stocks listed in Hong Kong to rise.
Eight analysts polled by Bloomberg News had given a median estimate of a 53.5 percent decline ahead of the results.
- Mass appeal -
A lack of hotel rooms is currently preventing the expansion of the mass market sector but with several major new casino resorts promising everything from fine dining to family friendly entertainment due to open later in the year gaming revenue will be given a boost.
The openings would have a positive impact in the second half of the year, CLSA gaming analyst Aaron Fischer said, and would combat a "massive shortage" of rooms.
"We only expect to see stabilisation in the numbers once we move into the third quarter," Fischer told AFP.
"They (casino resort operators) are trying to grow the mass market but the only way to do that is by adding hotel inventory."
Macau-based gaming analyst Ben Lee of iGamiX said the city also needed to lower its prices to make it more attractive.
"When a one-night hotel stay, or one bet on the baccarat table, is equivalent to the average amount of money spent by the average mainland Chinese tourist for an average trip, one may get an inkling as to why we have been getting fewer potential gamblers," he said.
The casino revenue slowdown has mostly been attributed to a high-profile corruption crackdown spearheaded by Chinese President Xi Jinping which has dented the VIP gaming market.
Xi's visit in December saw him drive home the message that the territory needs to diversify away from casinos.
Macau, the only part of China where gambling is legal, overtook Las Vegas as the world's casino capital in terms of revenue after the sector was opened up to foreign competition in 2002, and still enjoys gambling revenues multiple times that of the American city.
Comments
Comments are closed.