With fewer high-stakes gamblers coming to Macau, room rates would be driven down and attract more lower-spending tourists -- not necessarily the kind of patrons casinos would hope for, Anthony Wong, an analyst at UBS AG. Macau’s success has been built on high-rollers who account for about 70 percent of the total market, he said.
90% Gambling
Macau saw its first annual decline in casino revenue last year and may face a 21 percent drop this year.
More than $20 billion in the market value of the six casino operators has been wiped out so far this year. Sands China fell 1.5 percent to HK$32.05 by the close of trading in Hong Kong, while Galaxy fell 0.9 percent. Wynn Macau Ltd. lost 0.6 percent., MGM China Holdings Ltd. rose 0.13 percent, and SJM Holdings Ltd. was unchanged.
Gambling accounts for more than 90 percent of casino operators’ revenue in Macau and only 37 percent in Las Vegas, according to Zhou of Macquarie.
The industry’s plan is to use more hotel rooms to draw more overnight tourists, who spend four times more than day-trippers, according to data from Bloomberg Intelligence. Visitors in Macau, two-thirds dominated by Chinese, currently stay on average 1.4 days, it said. In Las Vegas, they stay about three to four nights on average, Wong at UBS said.
In the east of Cotai, cranes were erected around billionaire Steve Wynn’s new resort fronted by maroon glass panels. Nearby, workers built bamboo scaffolding around the structure of SJM’s Versailles-style Lisboa Palace as the Macau government pushes ahead with plans to turn itself into a world tourism center.
“Companies are spending all that big money on something that has yet to be proven to work inMacau,” Zhou said. “It proved to work in Vegas, but it took them 15 years -- it’s going to take a long time for Macau to get there.”