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Macau Casino : Best August Ever
9/2/09 - The land casino industry in Macau raked in over 10.6 billion patacas (US$1.34 billion) in August this year, the highest monthly gaming revenue ever recorded in the city, local broadcaster TDM reported on Tuesday, raising hopes that this may herald a sign of recovery after a period of negative growth.
Before August, the peak of monthly gaming revenue was recorded in January last year, when the figure stood at 10.4 billion patacas (US$1.32 billion), according to Macau's Statistics and Census Service. Local gaming revenues reached 9.7 billion patacas (US$1.2 billion) in August last year.
The gaming growth came as Macau's lacklustre economy continued to feel the strain of global recession and restricted tourism. Local GDP contracted 13.7 percent in real terms in the period, which was the worst decrease on record.
Gross gaming revenue and total visitor spending (excluding gaming expenses) went down by 12.2 percent and 20.6 percent year-on-year respectively in the second quarter, while gross fixed capital formation and merchandise exports shrank by 27.4 percent and 58.3 percent.
Despite the economic downturn in previous quarters, last month's significant growth of revenues generated by the city's gaming sector, the pillar of local economy, still showed that Macau's gaming market is yet to be saturated since gaming operators continued to unveil new casinos in the island this year, which further expanded the market, said Zeng Zhonglu, an economic professor at the Macao Polytechnic Institute.
City of Dreams, a large casino hotel complex run by Melco Crown Entertainment Ltd, and Hotel Lan Kwai Fung Macau with a gaming floor were opened respectively on June and August, bringing the city's total number of casinos to over 30 so far. Another casino hotel run by local gaming operator SJM was scheduled to be opened in coming months.
The growth of local gaming revenues will continue in the near future given the broadening economic pick-up in the Chinese mainland, Macau's major source market, and the dwindling impact of the global financial crisis, analysts predicted.
The government of Macau Special Administrative Region (SAR) has predicted a 10-percent drop in gross gaming revenues for the whole of this (2009) year.
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The Xinhua news agency also reported encouraging signs with the news that the improving economic environment has prompted Macau gaming operators to slow down personnel cutbacks. Las Vegas Sands, which runs a three casino complex in Macau including the largest Venetian Macau resort, has informed local labour authorities that it has decided to suspend its earlier plan to lay off 4 000 employees by this autumn.
Low visitor numbers continue to give cause for concern, however. Macau's gaming and tourism industries heavily rely on the mainland market, especially neighbouring Guandong province, and official figures indicate that visitor arrivals from the mainland, accounting for 48.6 percent of the total in the second quarter of this year, decreased by 19.2 percent year-on-year to just 852 167.
Local media quoted travel agencies in Guangdong as saying that the visa restrictions that limit mainland residents' trips to Macao Special Administrative Region (SAR), the only place in China where gambling is legal, will be relaxed in coming months. This will boost Macau's gaming and tourism industries, as most of the tourists tend to gamble on the main floor of casinos instead of the VIP halls catering to the high-roller gamblers.
Unlike Las Vegas, a large part of gaming revenues of Macau come from VIP or high-roller gambling.
As a gauge of investment, Xinhua reports that Macau's gross fixed capital formation shrank by 27.4 percent year-on-year in the second quarter, with private investment contracting by 30.6 percent upon suspension or slowdown of some major constructions.
Las Vegas Sands has already stopped its 12-billion-dollar Cotai Strip project on an area of reclaimed land in Macao, which is slated to build 11 resorts with a total of 20,000 hotel rooms and a number of casinos and shopping malls, when the global financial crisis made it hard for the company to seek funds to finance its projects. Similar decisions were also taken by Galaxy Entertainment, which postponed the opening of its mega casino complex until 2010.
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