After meeting with four of Macau’s gaming operators, Seaport Research Partners notes that Macau’s base mass is unlikely to experience a strong recovery until China’s economy and consumer confidence improve.
This conclusion is drawn from Sands China, the most representative operator in Macau due to its largest market share, including the mass market segment, supported by its extensive hotel room inventory.
Seaport senior analyst Vitaly Umansky indicates that the mass market is bifurcated, with the lower end (base mass) still not having recovered. This segment is experiencing both lower visitation and reduced spending per customer, which can be attributed to China’s economic conditions and constraints on middle-class income and wealth.
Seaport’s report highlights that Sands’ player reinvestment was excessively high in Q2 2024, as the strategy fell short of delivering the anticipated results. While Sands managed to maintain its overall market share, the elevated reinvestment costs negated the potential gains.
‘Sands China will most likely see a dividend restart in 2025, with the scale of the dividend dependent on performance after the completion of the Londoner. Hong Kong investors appreciate dividends, so it makes sense to restart some dividends at Sands China.’
MBS growth in 2025 due to Tower 3 redevelopment
Commenting on the Singapore business, Seaport notes that Marina Bay Sands’s (MBS) Tower 3 is expected to open in May next year, and this redevelopment is anticipated to be a key driver of growth in 2025.
The first quarter of this year saw an outsized performance, buoyed by seasonal factors, Taylor Swift concerts, and other major events in Singapore. However, the ongoing work at Tower 3 has impacted results in the second and third quarters, with the third quarter showing improvement over the second. The fourth quarter is expected to continue this trend, with both quarter-over-quarter and year-over-year growth anticipated.
The total capital expenditure for the renovation works is projected at $1.75 billion, with the renovations of Towers 1 and 2 already completed and the Sky Casino set to open by early September. Seaport emphasizes that the completion of Tower 3 by May 2025 will mark the final phase of this extensive redevelopment, solidifying MBS’ position as a premier destination in Singapore.
Melco reintroduces highest tier club for premium mass
Looking at other Macau operators, the research firm indicates that Melco’s marketing has been restructured, resulting in improved performance. For example, the employee incentive scheme has been reorganized and simplified, and the Melco loyalty program is being revamped with the Signature Club, Melco’s highest tier for premium mass, being brought back. The objective is to return to 2019 EBITDA levels by the end of 2025.
The incremental operating expenses will largely come from the opening of The House of Dancing Water (~$100k/day) in early 2025, but this is expected to be EBITDA positive.
The promotional environment seems to be stabilizing, and Melco does not plan to increase promotional intensity. The utilization of smart digital tables, combined with the breadth of player data for analytics, will allow operators to optimize reinvestment, resulting in a better return on investment.
Seaport indicates that, currently, Studio City has 30 tables running, with plans to have the entire casino fitted out with smart tables by October. City of Dreams is expected to have a full complement of smart tables by 1Q25, which will lead to some cost savings once fully implemented.
MGM projects mid-teens percent market share
MGM’s management remains optimistic about their potential to capture additional market share in Macau, a stance that contrasts with Seaport’s view that MGM’s share may have reached its peak. The company’s leadership suggests that achieving a mid-teens percentage share is realistic, with Q1 performance reaching approximately 17 percent and Q2 at around 16 percent. This projection underscores their confidence in expanding their presence despite a challenging market environment.
Meanwhile, Macau’s premium business, which represents the bulk of MGM‘s operations, continues to demonstrate year-on-year growth. Despite the soft Chinese economy, premium demand does not appear to have been significantly affected. However, it is still uncertain whether this demand would be even stronger without the current economic pressures.
Wynn’s smart table rollout slower than peers
Analyst Vitaly Umansky has highlighted that Wynn’s rollout of smart tables is progressing more slowly compared to some of its competitors. Currently, Wynn is testing a limited number of these tables, with plans to initiate a broader rollout later this year and into early next year. This cautious approach contrasts with the more aggressive deployments seen at other operators, which could impact Wynn’s ability to fully leverage the potential cost savings and revenue benefits that smart tables offer.
In the meantime, Wynn Macau is poised to benefit from anticipated improvements in the base mass business by 2025. The property’s stronger walk-in traffic compared to Wynn Palace positions it advantageously, especially as base mass walk-ins remain softer than pre-2019 levels.
Wynn Palace, on the other hand, is expected to maintain a better-than-fair share position, bolstered by the opening of a new international food hall planned for mid-2025. This development is anticipated to attract more family and longer-stay customers, with premium guests traveling from increasingly distant locations beyond Guangdong.
