Macau gaming update delivered by Melco
The chief operating officer of Melco Resorts and Entertainment has said that despite improvements made in gambling spend in Macau, mass market players aren’t playing as strongly as they have in the past.
GGR Asia reports that David Sisk’s remarks came as he discussed the group’s first quarter earnings last Wednesday.
A note from brokerage Sanford C Bernstein mentioned Macau’s April casino gross gaming revenue had been “steady”, even as visitor volume had risen, indicating that the recovery of the Macau tourism sector had involved a “low value customer” segment, in gaming terms.
Mr Sisk suggested however that his firm’s market share of so-called premium mass gamblers, those playing in cash at high multiples rather than via rolling chips through junkets, had “grown a little bit, if anything”.
He added: “I don’t think we’ve lost any share,” in premium mass.
Some of the premium mass people were prior VIP players that had “switched over from the junkets”, he suggested.
Melco Resorts’ chief financial officer, Geoff Davis, confirmed to analysts that while first quarter daily operating expenses in the Macau market, where the firm runs City of Dreams, Studio City and Altira Macau, were US$1.9 million, that had now rise to about US$2.1 million, as a function of returning business.
He also confirmed the group had for the first quarter provision for bad debt amounting to US$17 million, compared to US$23 million in the fourth quarter.
Melco Resorts’ chairman and chief executive Lawrence Ho told the call that Melco’s view from 10 years ago was that the VIP market wasn’t really sustainable.
“I think even within the VIP business, the junket part of it is not going to be what it was in 2019 and I think more of that might shift to the premium direct side of things,” Mr Ho said.
Hong Kong and China key to Macau’s fortunes
On the non-gaming side of the business, the CEO noted that retail volumes had been recovering quickly and were already this year “close to 2019 level”.
Mr Ho thought that was partly a function of Hong Kong no longer being bundled with Macau for mainland tourist trips, particularly due to the pandemic.
The CEO was asked about reports that the leaders of Macau and Hong Kong had respectively discussed further easing of travel arrangements between the places.
Mr Ho said: “In terms of the Hong Kong-Macau travel corridor, it would be great if it happened because Hong Kong traditionally has been 20 per cent, 25 per cent of our business in Macau.”
But he added: “The most important market for Macau is always going to be mainland China.”
As the mainland had a zero-tolerance policy with regards to COVID-19 cases, Mr Ho said he thought Macau “would have to balance the Hong Kong travel corridor with not jeopardising” the quarantine-free travel arrangements Macau had with the mainland.
Mr Ho also reiterated during the earnings call that the firm was “committed to bringing a world-leading integrated resort”, to the Japan market and continued to “pursue opportunities within the market.”
He added: “We are currently engaged with multiple potential partners.
He did not mention any particular city.
While COVID-19 continued to “present challenges in terms of aspects of process timing and travel, integrated resorts in Japan have continued to move forward and we remain convinced that Japan represents the best potential new gaming market globally,” Mr Ho said.