Macau revenues
could leap by 18%

Aug 8, 2006 5:29 AM

Las Vegas-based Globalysis Ltd. issued a forecast last week of expected gross gaming revenue in Macau for calendar year 2007.

The forecast estimated that legal casino gaming revenue in Macau would rise to approximately $8.0 billion in the calendar year from an estimated figure of $6.8 billion in 2006; this would represent an approximate 18% increase year over year.

Some of the cited success factors for Macau which will contribute to the positive growth are strong macro-economic activity, robust tourism industry capital investments, increasing disposable income figures from countries such as China, and expected increases in direct airline service into Macau from low-cost carriers.

"Macau will continue its transformation into a holistic leisure tourism destination in 2007," said Jonathan Galaviz, Partner at Globalysis. "We believe that Macau’s casino gaming revenue in 2007 will be driven by substantial growth in non-casino amenities such as new convention center venues and innovative entertainment options incorporated into Macau’s fresh Las Vegas style integrated resorts."

The Globalysis report cited new Las Vegas style integrated resorts opening later this year and mid-2007 as providing new tourism value propositions to consumers in Asia.

In addition, the growth of Macau as a true tourism destination, rather than just a day-visit casino gaming hub, will contribute to the positive growth in 2007 as well.

In January 2006, Globalysis issued a forecast of Asia’s total expected casino gaming revenue for calendar year 2006 at approximately $13 billion (U.S. dollars).

Globalysis Ltd. is a Las Vegas, Nevada based boutique research and advisory firm that focuses on the casino gaming, airline, and hotel/lodging industries within the tourism sector.

Wall Street analysts are also "bullish" about Macau’s prospects, though their revenue projections may not be as optimistic.

CIBC World Markets, for instance, said gaming revenue in Macau through the second quarter reached $194.4 million, which projects to an 11.8 percent increase on an annualized basis.

Those projections are based on statistics released by the Macau Gaming Inspection and Coordination Bureau.

Key to gaming in Macau is that slot revenue rose 43 percent. "We believe the acceptance of slots in Macau could be a significant positive for the equipment suppliers and operators, as slots generate higher margins than table games," said CIBC analyst David Katz. "We remain positive on the Macau market on the long term, but believe the market could grow unevenly in the near term, as U.S. operators gain intelligence about the breadth, depth and preferences of Asian gamers."