According to projections by the banking group Jefferies, the landscape of Macau's casino market in 2025 will witness significant shifts in market shares among the operators. The two key players expected to gain an advantage are Sands China Ltd and Galaxy Entertainment Group Ltd. This anticipated progression is largely due to their extensive and enhanced hotel offerings. These operators are preparing to unveil additional rooms, which are predicted to increase gaming volumes substantially.
A recent report highlighted the impact of impending developments on a market dominated by six operators. This includes the addition of hotel capacities by Sands and Galaxy. In 2025 and 2026, a slight redistribution of market share is projected, favoring Sands China and Galaxy Entertainment. The reopening of Sands’ The Londoner Macao hotel facilities and the debut of Galaxy's Capella are crucial to this shift.
The improvements at The Londoner Macao involve a full refurbishment, including the relaunch of one of its two casino spaces and expansion of hotel capacity. Next year, the Galaxy Macau location will welcome Capella, a new luxury hotel that forms part of Galaxy Entertainment's sprawling Cotai central complex.
Projected Growth in Gaming Revenue and Visitor Numbers
Jefferies forecasts a positive outlook for Macau's gaming revenue in 2025, clustering at MOP245 billion (approximately USD 30.6 billion), a growth of 8% from the previous year, achieving 84% of the levels observed in 2019. Their calculation is predicated on a few pivotal factors: a 5% increase in visitor numbers year-on-year, expansions and upgrades in hotel capacity with a particular focus on suites catered to premium mass players, the introduction of new attractions and events, and an economical environment poised by the Chinese government's prioritization of economic growth.
Citi, another prominent banking institution, in its recent outlook noted that the growth in suite accommodations in Macau’s resorts, despite reducing the total number of hotel rooms, may cater to the premium mass market segment, therefore boosting the gaming revenue. Sands China's Londoner Grand, Galaxy's Capella, and new accommodations by MGM China Holdings are cited as contributors to this supply reposition.
Jefferies highlighted the 2023 market rebound post-pandemic, attributing a 27% market share to Sands China, albeit within a diminished revenue setting. The expectation is for Sands' market share to stand at 24.4% in 2024, growing to 25.7% by 2025, aided by The Londoner's recent enhancements.
Strategic Focus on EBITDA and Service Quality
While market share remains a focal point, Jefferies emphasizes that enhancing adjusted EBITDA (earnings before interest, taxation, depreciation, and amortization) is a mutual goal across casino operators. Lawrence Ho Yau Lung of Melco Resorts shared a similar view in an earlier fiscal discussion, underscoring that the core concern is EBITDA rather than just the top-line market share.
In a recent earnings call, Sands China's leadership outlined ambitious EBITDA targets for The Londoner Macao and The Venetian Macao, each anticipated to exceed US$1 billion in the medium term, with the wider Macau portfolio also contributing another significant sum annually. Citi remarked that Sands China had suffered a downturn due to The Londoner Grand's renovations but noted promising escalations starting mid-2024 with Galaxy Macau Phase 3.
Jefferies further mentioned Galaxy's dedication to providing premium products and services rather than engaging in aggressive price promotions. They stated the need for a high-quality client base, willing to incur notable theoretical daily losses, to justify offering upscale complimentary services.
Source: EBITDA a focus in Macau market share battle: Jefferies, GGRAsia, November 21, 2024.
Posted by Wizard
Nov 21 2024
Nov 21 2024
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