The dynamics driving gross gaming revenue (GGR) growth in Macau have evolved significantly over time, with the current trend being significant spend by premium players, requiring more high-end hotel rooms.
In the past, the traditional model was straightforward: increasing the number of hotel rooms would naturally lead to higher GGR. However, this logic has shifted, and the focus has now moved toward catering to the premium mass segment, where larger, more luxurious hotel suites play a pivotal role in driving revenue.
In the latest report entitled “Recipe for FY25E GGR Growth” by Citigroup analysts George Choi and Timothy Chau, it is mentioned that historically, the formula for GGR growth was simple: more hotel rooms, and increased gaming activity. However, this approach is no longer as effective in the current market.
The new growth driver in Macau’s gaming sector is the expansion of high-end hotel suites tailored to premium mass players. These players, who tend to place higher wagers, benefit from staying in more spacious and exclusive accommodations, which directly influences the number of hands they play at the tables during their stays.
This shift in focus toward premium mass players reflects broader trends in global gaming markets, where the emphasis has moved from quantity (more rooms) to quality (larger, more luxurious suites). The impact of this shift is clear: although the total number of hotel keys may decrease, the increase in the supply of high-end suites is expected to bolster GGR, as these suites attract higher-spending players who are likely to stay longer and play more.
Several key developments in hotel supply are expected to further fuel the growth of the premium mass market. Major casino operators are set to expand their suite offerings in the coming years, particularly in 2025, which will have a significant impact on GGR growth.
For instance:
- Sands’ Londoner Grand will introduce approximately 1,500 new suites.
- Galaxy’s Capella will add 100 high-end suites.
- MGM‘s properties will contribute around 70 new suites.
Smart tables and new side bets
The implementation of smart gaming tables and new side bets is also seen as a key growth driver for 2025. Citigroup notes that smart gaming tables with RFID chips are increasing gameplay speed. For example, a player betting HK$10,000 ($1,285) per hand at a traditional baccarat table typically plays 40 hands per hour, generating HK$400,000 ($51,390) in gaming volume.
Switching to a smart table reduces the game time by just 5 seconds per hand, and the player’s gaming volume increases to HK$423,529 ($54,413), a 5.9 percent rise in GGR per hour. This faster gameplay allows casinos to generate more revenue per player.
Meanwhile, baccarat side bets, such as Lucky 6, Big 6/Small 6, and Lucky 7, have become increasingly popular since their introduction. These bets contribute to a higher house edge, which increases the theoretical hold rate from around 2.85 percent to over 3.15 percent. The growth in the popularity of side bets directly impacts GGR, providing casinos with an additional revenue stream.
Visitation to increase mid-single digits
But bringing in more visitors overall is still important.
In the first half of 2024, China added ten cities to the Individual Visitor Scheme (IVS), increasing the number of cities from 49 to 59. As a result, visitation from mainland China grew significantly, with visitors from these new cities rising by 54 percent year-on-year, contributing to a 36 percent increase in overall mainland Chinese visitation.
Analysts George Choi and Timothy Chau note that the growth in visitors, along with the impact of the new IVS cities, is expected to drive a mid-single-digit increase in tourist arrivals, reaching around 35.7 million in FY25. This will lead to a boost in both the number of players and GGR.
Citigroup forecasts Macau’s GGR to grow by 7 percent year-on-year in FY25, reaching MOP242.5 billion ($30.4 billion), or 83 percent of the 2019 level.
For FY26, GGR is expected to increase by 8 percent year-on-year, reaching MOP261.9 billion ($32.8 billion), or 90 percent of the 2019 level.
The Macau government has projected FY25 GGR at MOP240 billion ($30.04 billion), slightly lower than Citigroup’s forecast. Historically, the government has underestimated GGR by 10 percent to 60 percent in most of the last decade, suggesting that Citigroup’s forecast may have significant upside potential.
