Parisian Macao a possible headwind for Studio City

Sands China’s Parisian has seen strong foot traffic since opening, according to Union Gaming in a note on Monday.

The French-themed casino resort opened its doors on September 13, marketed as a high-quality but affordable offering with a focus on the mass market.

“We think Parisian is the right product targeting the right market segments at the right time.”

“The property has generally exceeded our expectations, and most importantly seems to hit the sweet spot of what a typical mainland mass market visitor generally responds well to (sense of grandeur, massive scale, European highlights),” said the brokerage.

Public awareness for the new resort has also been high, compared to the opening of Wynn Palace – which was said to have taken a more passive marketing strategy, according to Buckingham Research Group on Thursday.

“The awareness of the Parisian [Macao] among gamblers was high, with Sands having blanketed the region with social media impressions of the new property over the last couple months,” commented analyst Christopher Jones.

Foot traffic has also been consistently high since opening, a positive for Sands China’s linked properties, said Union Gaming.

“The volume of foot traffic between Venetian and Parisian, as well as the volume of foot traffic between Cotai Central and all three SCL properties on the west side of the Cotai Strip (Parisian / Four Seasons / Venetian) is many multiples of the volume of foot traffic between Parisian and Studio City (same goes for COD).

However, the analysts noted that contrary to “conventional wisdom”, the opening of the Parisian may in fact be a potential headwind for Studio City.

“Based on multiple observations over this past weekend, we consistently observed more persons walking to Parisian (from Studio City) than to Studio City (from Parisian). In other words, a net migration towards Parisian. The bottom line is that Parisian seems to be significantly more compelling than Studio City from a mass market consumer perspective and should these trends be maintained Parisian could prove less of a benefit and more of a headwind for Studio City.”

CLSA on Monday said while it expects the property to be a significant EBITDA contributor over time, there is likely to be material cannibalisation (of its own properties).