See the ‘Eiffel’ at Parisian Macao

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.