Macau Casino Market Still Susceptible to Policy WhimsMay 25, 2017 11:48 am
In August of 2016, Macau’s casino market rebounded after spending more than two years in the doldrums, and has subsequently posted nine consecutive months of positive growth. While a renewed sense of optimism now exists about the world’s biggest casino destination going forward, the industry is still susceptible to the policies of President Xi Jinping’s government, and as investment firm Sanford C. Bernstein warned recently:
“There is no guarantee that the anti-corruption campaign continues to soften; it could intensify again. We have repeatedly highlighted the [Chinese government’s] policy risks that can create headwinds for Macau’s gaming sector.”
The anti-corruption drive referred to got underway in 2014, after Chinese authorities clamped down on the country’s junket operators, which subsequently led to a sharp decrease in the number of mainland high-rollers visiting the island gambling destination. According to Melco International CEO Lawrence Ho, however, these VIP gamblers were mostly collateral damage from the crackdown, which was unfortunate as the government’s policies were actually focused on stamping out corruption, and not extravagance.
Needless to say, Ho remains bullish about the prospects of Macau’s gambling industry going forward, and foresees continued growth into future. According to the Hong Kong businessman, the resort’s market could grow to around $45 billion by 2022, compared to 2016’s tally of $27.95 billion, and elaborating further, Ho commented:
“The middle class and wealthy individuals in China, who didn’t do anything wrong, have realized they’re in the clear, and can now go back to living upscale [lives] and having fun.”
Meanwhile, the anti-corruption drive has also had the benefit of focussing the casinos attention on developing their non-gambling products in order to increase their mass market appeal. With these venues now offering entertainments which appeal to a broader demographic than just China’s super wealthy, Macau’s Government Tourist Office has forecast visitor arrivals to top 5% in 2017, representing a significant increase versus the 0.8% increase noted in 2016.