See the ‘Eif­fel’ at Parisian Ma­cao

China Daily (USA) - - FRONT PAGE - By REUTERS

US casino mogul Shel­don Adel­son opens his fifth re­sort in the Chi­nese gam­bling hub of Ma­cao on Tues­day, as signs emerge of a turn­around in the ter­ri­tory’s for­tunes af­ter two years of fall­ing rev­enues cast doubt on the wis­dom of new devel­op­ments.

Sands China, a sub­sidiary of Adel­son’s Las Ve­gas Sands, throws open the doors of the $3 bil­lion Parisian just three weeks af­ter an­other Las Ve­gas ty­coon, Steve Wynn, opened his lat­est plea­sure palace in the for­mer Por­tuguese colony.

Some an­a­lysts ques­tioned whether the semi-au­tonomous ter­ri­tory on China’s south­ern tip, the only place in the coun­try where gam­bling is le­gal, could cope with the new sup­ply as gam­ing rev­enues plumbed 5-year lows.

Ma­cao’s casino in­dus­try has been hit by China’s slow­ing eco­nomic growth, a pro­longed anti-graft cam­paign which drove many high­rollers into the arms of ri­val Asian des­ti­na­tions and a gov­ern­ment push to wean it­self off gam­bling by pro­mot­ing a more fam­ily-friendly image.

But monthly gam­bling rev­enues grew for the first time in more than two years in Au­gust, inch­ing up 1 per­cent, amid signs that wealthy gam­blers are start­ing to re­turn and op­er­a­tors are learn­ing to make money from mass­mar­ket vis­i­tors.

“We con­clude that Ma­cao is now at the start of a mass-led GGR (gross gam­ing rev­enue) re­cov­ery,” said Karen Tang, an an­a­lyst at Deutsche Bank in Hong Kong. “Im­por­tantly, both base mass and pre­mium mass are grow­ing again.”

Even if Ma­cao never again reaches the stel­lar growth of its boom years, casino bosses say they can weather the slow­down. Af­ter all, to­tal monthly tak­ings of about $2 bil­lion, while less than half 2014 lev­els, are still a third of what Las Ve­gas earns an­nu­ally.

In­vestors look­ing for growth from casino stocks, how­ever, will be look­ing to see whether the new projects will be able to boost rev­enues af­ter open­ings last year by Melco Crown and Galaxy En­ter­tain­ment failed to in­crease over­all spend­ing, even as they boosted vis­i­tor num­bers.

The new Parisian, com­plete with a scale replica of the Eif­fel Tower and Ver­sailles themed in­te­ri­ors, is geared to­wards a broad vis­i­tor base in line with gov­ern­ment pol­icy to widen Ma­cao’s ap­peal.

Hun­dreds of ho­tel rooms are set to bol­ster the con­ven­tion and ex­hi­bi­tion business, while a ro­tat­ing Broad­waystyle show and child at­trac­tions are fea­tures aimed squarely at lur­ing hol­i­day va­ca­tion­ers other than hard­core gam­blers.

An­a­lysts said that while Wynn Palace, which opened on Aug 22, has at­tracted in­ter­est from high-end customers, its lux­ury shops and fancy restau­rants are mostly empty.

In­stead of flock­ing to the bac­carat ta­bles as they used to in Ma­cao’s hey­day, the crowds at the Palace mainly clus­ter in front of huge flower in­stal­la­tions for self­ies.

In the long term, Ma­cao holds strong ap­peal as op­er­a­tors are in­creas­ingly gen­er­at­ing rev­enue from re­tail, ho­tels and mass-mar­ket gam­ing, said David Wil­liamson, head of AM Cap­i­tal in Hong Kong.

“We es­ti­mate this stage to last till 2030. Af­ter 2030, we ex­pect the in­dus­try to en­ter a ma­tu­rity stage, which will be char­ac­ter­ized by a steady but low-growth and high-div­i­dend pay­out,” he said.

... Ma­cao is now at the start of a massled GGR (gross gam­ing rev­enue) re­cov­ery.” Karen Tang, an­a­lyst, Deutsche Bank in Hong Kong

BOBBY YIP / REUTERS

Vis­i­tors take pho­tos in front of a scale replica of the Eif­fel Tower in Ma­cao on Aug 16. The tower is part of the Parisian Ma­cao built by Las Ve­gas Sands, and is sched­uled to open Tues­day.

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