Has James Packer jumped the gun scrapping the international ambitions of his gaming empire Crown Resorts this month and exiting its casino investments in Macau?
The former Portuguese colony's efforts to reinvent itself with a half-size Eiffel Tower replica and Melco-Crown's Hollywood-themed resort Studio City are starting to pay off, according to local government data.
More BusinessDay Videos
- Video duration
- 01:09
Crown cashing out of Macau and Las Vegas
Crown cashing out of Macau and Las Vegas
James Packer is scrapping plans for an international gambling empire as Crown looks to offload shares in an increasingly risky Macau to focus on a safer bet at home.
Up Next
Amazon ships itself to speed up
- Video duration
- 01:22
- Video duration
- 01:22
Amazon ships itself to speed up
Amazon ships itself to speed up
Amazon's Prime Air cargo planes are flying nearly full, taking business away from FedEx and UPS.
Up Next
Real time payments on its way
- Video duration
- 01:17
- Video duration
- 01:17
Real time payments on its way
Real time payments on its way
The New Payments Platform, set to go live in 2017, will change the way businesses and individuals make electronic payments.
Up Next
Is the global economy gaining momentum?
- Video duration
- 04:29
- Video duration
- 04:29
Is the global economy gaining momentum?
Is the global economy gaining momentum?
Amherst Pierpont Global Strategist Robert Sinche discusses industrial production, momentum in the global economy and its impact on currencies.
Up Next
Honey wars: AU vs NZ
- Video duration
- 01:42
- Video duration
- 01:42
Honey wars: AU vs NZ
Honey wars: AU vs NZ
Pavlova, Russell Crowe, rugby and now anti-bacterial honey are all on the growing list of rivalries between Australia and New Zealand.
Up Next
Wall St rally loses steam
- Video duration
- 01:08
- Video duration
- 01:08
Wall St rally loses steam
Wall St rally loses steam
US stocks fall in low volume in a broad decline triggered in part by a sharp drop in home resales.
Up Next
BOJ's long struggle to get Japan growing
- Video duration
- 03:56
- Video duration
- 03:56
BOJ's long struggle to get Japan growing
BOJ's long struggle to get Japan growing
An animated graphic explains the tactics used by the Bank of Japan to boost the country's stagnant economy.
Up Next
US charges Chinese hackers with trading on stolen data
- Video duration
- 02:02
- Video duration
- 02:02
US charges Chinese hackers with trading ...
US charges Chinese hackers with trading on stolen data
Three Chinese hackers made more than $4 million in illicit profits after breaking into the servers of top corporate law firms in New York.
Crown cashing out of Macau and Las Vegas
James Packer is scrapping plans for an international gambling empire as Crown looks to offload shares in an increasingly risky Macau to focus on a safer bet at home.
Macau has seen a surge in tourists from beyond China - a sign that growth in the world's biggest gambling hub next year will come from leisure players rather than the high-stakes Chinese gamblers it used to pursue.
Related Content
Analysts surveyed by Bloomberg see gambling revenue rising 7 per cent in 2017 led by mass market players, after three consecutive years of declines. Visitor numbers from South Korea, Japan, and the US jumped in November, helping offset declining arrivals of mainland Chinese who make up two-thirds of Macau's 2.6 million visitors in the month, according to the city's Statistics and Census Service.
Macau's gaming industry has seen a nascent recovery in the northern hemisphere summer as Las Vegas Sands Corp. and Wynn Resorts opened tourist-friendly resorts after China's crackdown on corruption and illegal outflows scared off VIP players.
Those efforts intensified in October, when Chinese authorities arrested 18 Crown employees for "gambling crimes" to deter its citizens from gambling overseas. The city is at the same time fending off regional challengers such as South Korea and the Philippines.
"There are definitely more reasons to come to Macau now versus two years ago, and that is the key reason why overnight visitation is growing faster than total visitation," said Nomura Holdings analyst Richard Huang. As more casinos open in Macau in the coming years, "we expect that to continue drive growth in the mass gaming segment," he said.
The Macau government is due to announce gross gaming revenue for December as early as January 1. Analysts surveyed by Bloomberg expect full-year gambling receipts of about 222.8 billion patacas ($38.8 billion), a decrease of 3.5 per cent, extending declines of 34 per cent in 2015 and 2.6 per cent in 2014, according to the median of ten estimates.
Visitors who stay at least a night in Macau, typically tourists, rose 10 per cent in November and accounted for 53 per cent of total arrivals, while same-day visitors fell 9.7 per cent, according to government data. Overnighters are also staying longer, at an average of 2.1 days.
Long way to go
"Without a doubt over past several months, Macau has felt busier than it has in a couple years," said Grant Govertsen, an analyst at Union Gaming Group. But while Macau's government is trying to become less reliant on gambling, there's still a long way to go before it becomes like the Las Vegas Strip, where non-gaming revenue makes up 62 per cent, compared with about 6 per cent in the Chinese city, he said.
"Does the fact that Macau has an Eiffel Tower now bring extra people to the market? Yes, but their main activity here will still be gaming," said Govertsen. Las Vegas Sands opened its $US2.9 billion ($4 billion) casino project in September featuring the Parisian landmark, about a year after Melco Crown Entertainment opened its Hollywood-themed Studio City that includes a Batman ride and a Ferris wheel shaped in a figure eight.
MGM China and SJM Holdings are also planning to open additional casino resorts in Macau next year. Macau casino shares have jumped this year in anticipation of the tourist-led recovery, with MGM China surging 52 per cent and Galaxy Entertainment Group advancing 36 per cent.
Still, Galaxy's billionaire chairman Lui Che-Woo said in an interview in September it was too early to say the worst is over for Macau, preferring to wait for more-sustained growth, backed by mainstream gamblers rather than VIPs.
Meanwhile, Melco Crown Chairman Lawrence Ho is setting his sights beyond Macau, as the fight for market share in the former Portuguese enclave heats up. The billionaire is taking greater control of Melco Crown after James Packer's Crown sold down its stake in the Macau casino operator.
"We are in a recovery. That recovery is not going to be the same as the recovery during the global financial crisis," Ho said in an interview last month, referring to Macau. "This time around, it's different. It's going to be more of a natural recovery."
Crown staged a massive retreat from its international operations in early December, exiting Macau and shelving plans to build a casino in Las Vegas, to reduce debt and focus on its casinos in Australia, led by the $2 billion high-stakes Barangaroo resort in Sydney.
Bloomberg with BusinessDay
0 comments
New User? Sign up