The “if you build it, they will come,” philosophy has long been prevalent in the casino industry. Almost 19,000 hotel rooms will be added between now and 2018, increasing the total number to more than 47,000, according to data from Bloomberg Intelligence. Las Vegas currently has about 150,000 rooms.

There’s no overcapacity though, Zhou of Macquarie said. Macau’s hotels are at 84 percent occupancy rate on average in the past 10 quarters. Most casino operators give out 90 percent of rooms to high rollers for free, he said.

Vegas During Recession

The last time Las Vegas saw a major increase in rooms was in 2008 and 2009 when 16,000 rooms were added, a 12 percent increase, according to statistics from the Las Vegas Convention and Visitors Authority. Those new projects, including MGM Resorts International’s CityCenter, Wynn Resorts Ltd.’s Encore and Las Vegas Sands Corp.’s Palazzo, opened in the midst of the financial crisis and subsequent recession.

Then, Wynn Resorts cut salaries, Sands was forced to raise money to avoid bankruptcy, and MGM had to sell a casino to refinance debt and shelved a planned Atlantic City development.

Average annual hotel occupancy dropped from 90 percent in 2007 to 80 percent two years later, while the typical daily room rate slid 30 percent to $92.93. Those numbers have yet to return to their 2007 peaks.

Jim Murren, chief executive officer of MGM Resorts International which is building a $2.9 billion resort in Cotai scheduled to open in late 2016, said the Macau operators have much stronger balance sheets than the Las Vegas companies did during the recession. It is unlikely Macau will see the same kind of crash in room rates and profits that put Las Vegas casino operators on the brink of insolvency, he said.

Global Meltdown

“There is no chance of that happening in Macau,” he said in a May 4 interview. “The room supply is not significant. We have 500 rooms at the MGM Macau. We’re renting rooms every night at the Mandarin next store. Vegas had a large base and we all added in the teeth of the recession. We had a global meltdown.”

Still, hotel occupancy rate in Macau has already dropped to 77.3 percent in the first quarter from 85 percent in the previous three months. Galaxy is introducing hotel promotions to mark the openings, while Sands China offers discounts of as much as 50 percent.