"Macau to see Vegas, Singapore revenue model"

jun25

Macau with a population of just 700,000 squeezed into just 33 sq. kms, saw 35 million visitors serviced by just 43,000 hotel rooms in 2024. Its 30 casinos generated gross gaming revenue (GGR) of US$28.3 billion in the same year.

The oft-touted Las Vegas saw 41 million visitors spread over 150,211 hotel rooms, losing US$8.8 billion last year in circa 150 casinos.

Regionally, Singapore has GGR of $4.3 billion generated by just two casinos. Its international visitors numbered 16.5 million in 2024, consisting of 18.7% Chinese, 15% Indonesia, and 0.7% from both India and Malaysia, spread over 73,000 hotel rooms.

Thailand received 35.5 million international visitors in 2024, with the top four origin countries being China (19%), Malaysia (14%), India (6%) and South Korea (5%).

Comparing Macau with Thailand, Macau may boast the same visitor volume, however if you removed the mainland, Hong Kong and Taiwan, the number of international tourists from outside these zones represent a mere 7.7% or 2.7 million, nowhere near Thailand’s well diversified market, nor Singapore’s.

Furthermore, more than half of the visitors to Macau (54% of all tourists) are same-day visitors, who spend only 21% of what overnight visitors do. Excluding gambling, the average per capita spend in 2023 was US$315.

By the same measure, Thailand’s Tourism Authority reported that the average spend per foreign tourist in their country in the same year was around US$1,430, or roughly 4.5 times Macau’s. 

Singapore was roughly similar at US$1,512 to Thailand for the same period.

Market potential

How does one calculate potential gross gaming revenue for a market? The usual method is to project the likely foot traffic, assume an estimated spend per head, say US$100 per person, and voila, Bob’s your uncle! This is a typical US formula based on the metric that the dominant visitor profile over there is your average garden variety mass. Ergo, number of visitors x average spend = GGR (Gross Gaming Revenue).

Asia has always been a very different proposition, as its various denizens have always lower disposable income for the mass, inversely, a much higher propensity to “invest on the gaming tables” than the westerners, and a much lower susceptibility to expensive dining with celebrity chefs. This is very clearly demonstrated in Macau, Philippines, Singapore and believe it or not, even in Australia, where gaming revenue continues to form a significant percentage of total revenue despite decades of ‘Vegas-isation” attempts.

Ergo, we believe one of the fundamentals to estimating the potential gaming revenue of a regional market is not the mass traffic that could potentially be generated, but the quality and the source of the guests the project is able to attract, in short, the VIPs. Average GDP per capita for most of Asia, except for Singapore, is much lower than that of the US. Yet the average bet seen in most of the casinos dotting the landscape around the region is much higher than that seen in some of the finer casinos in Vegas. This translates into two traits: firstly the penchant for gambling/risk taking being much higher in Asia, particular in the upper echelons, and secondly, gambling being seen by most not as an entertainment activity – for there are loads more activities that require less money than gambling – but a financial “investment” through which they hope or even believe they can generate an attractive return.

https://www.macaubusiness.com/opinion-mango-sticky-rice/

jan24

You went as far as Mandalay Bay, which was on the end of the Strip, they were up to 73 percent non-gaming. So, they had to do a lot more to draw and attract that customer profile that’s attracted most to Vegas.

Then Sheldon Adelson really turned it around with his MICE model. And his MICE model was very, very specific. When we were writing the mission, vision and values to introduce to the team, I asked him “Who are we competing with in Vegas?” and he said “We’re not competing with anybody in Vegas. I’m competing with New York City.”

And with Opryland, in Nashville. They were doing huge conventions.

They had massive convention centers with supporting hotel rooms in the cities. And so the biggest shows in America were being held in those cities. He wanted to bring them to Vegas. So, he had to invent that product. So, the 1.2 million square foot Convention Center, linked directly to 3,000 all-suite, business-oriented customers, was the solution.

https://agbrief.com/intel/face-to-face/19/01/2024/niall-murray-macau-move-beyond-junkets-horse-racing/

 JUl23

Macau is likely to “transition to the Las Vegas Strip/Singapore model” in terms of where Macau casino resorts derive most of their earnings, says a report from Macquarie Equity Research.

“The China and Macau governments would like to transform Macau from a gaming to non-gaming destination,” wrote analysts Linda Huang and Chad Beynon, referring to a public-policy wish to diversify Macau’s economy away from a dependence on high-stakes gambling tourism.

“We expect Macau’s gaming operators to transition to the Las Vegas Strip/Singapore model with a lower gaming revenue contribution at approximately 40 percent/68 percent, respectively”, versus Macau’s estimates of approximately 83 percent in 2023, they added.

The institution observed that “92 percent” of the six Macau operators’ pledged capital expenditure in aggregate as part of the conditions of each receiving a new 10-year gaming concession beginning on January 1, was on “non-gaming”.

https://www.ggrasia.com/macau-to-see-vegas-singapore-revenue-model-macquarie/