Non-gaming spend not helping Macau

Dec 11, 2015 9:24 AM

Non-gaming revenue at Macau resorts is not large enough to offset declines in gaming activity, according to a report released this week by Union Gaming Research.

Fitch Ratings Inc., reports less than 10 percent of the total gross revenue came from non-gaming activities at Macau properties last year.

Macau’s gross gaming revenue during November fell by 32.3 percent compared to the same year earlier period, the 18th straight month of double digit declines.

Nonetheless, the Macau government has told casino operators that it wants to see an increase in non-gaming elements such as shopping and live entertainment. Gaming tables are being allocated to new casinos on the basis of the investment in non-gaming features.

Union analysts Christopher Jones and John DeCree said that five to ten years down the road, the non-gaming spend might be the primary driver of revenue and earnings “given the significant investment in this area” but it is “unlikely,” they said, that non-gaming spend will “significantly drive” Macau earnings in the next 24-36 months.

The report said that “given the economic challenges facing China today” there is little evidence to support the notion that Chinese customers are going to start spending more per visit.

About 40 percent of the VIP gaming promoters or junkets operating in Macau before the downturn are no longer active in the Macau casino market.

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. Email: [email protected].