2034: a decade of meaningful profitability expansion (33.7 percent in 2034)
dez25
Macau’s casino industry is poised for a decade of meaningful profitability expansion, with industry-wide adjusted EBITDA to gross gaming revenue (GGR) margins expected to rise from 27.6 percent in 2024 to 33.7 percent in 2034, according to Morningstar’s latest outlook.
The firm attributes the improvement to a sustained shift toward higher-margin mass-market play, rising operating efficiency, and a regulatory environment that constrains supply and supports industry-wide economics.
Jennifer Song, senior equity analyst at Morningstar, projects industry-adjusted EBITDA to grow at a compound annual rate of 6.2 percent through 2034, outpacing the expected 4.2 percent compound annual growth rate (CAGR) in GGR during the same period.
The research notes that longer-term operating leverage—particularly as mass volumes expand—will be central to margin enhancement. While promotional intensity has increased in the near term amid heightened competition, Morningstar expects mix improvements and incremental efficiency gains to outweigh cost pressures over the next decade.
The financial data and analytics firm expects industry GGR to reach $42.5 billion in 2034, recovering to 2019 levels by 2030 despite the structural removal of junket-driven VIP volumes. Mass-market revenue is forecast to exceed historical peaks by a wide margin, even though total GGR will remain below the 2013 high.
The mass segment—already 88 percent of GGR in 2024—continues to be the core driver of long-term expansion, supported by broader customer pools, more resilient spending, and higher margins relative to VIP play.
Mainland China remains the engine of growth
Visitors from mainland China accounted for roughly 70 percent of Macau’s arrivals in 2024, underscoring the city’s reliance on the mainland’s economic and demographic scale. Morningstar notes that China’s per-capita disposable income—expected to roughly double between 2020 and 2035—will continue to support long-term leisure spending and gaming demand.
The evolution of travel facilitation continues to deepen Macau’s addressable market. Expanded Individual Visit Scheme (IVS) processing, the rollout of self-service e-visa kiosks, and improved cross-border infrastructure—such as high-speed rail coverage and enhanced air links—have significantly increased accessibility. Morningstar estimates that five-hour rail access now covers around one-quarter of China’s population, while two-hour air corridors reach more than 40 percent, broadening Macau’s reach well beyond the Greater Bay Area.
Meanwhile, non-gaming has become the strategic priority. A central pillar of the industry’s structural transformation is the shift toward non-gaming investment. Under the current 2023–32 concession cycle, operators have committed $18 billion in development spending, with more than 90 percent allocated to non-gaming upgrades such as hotels, entertainment venues, retail experiences, and MICE facilities.
Morningstar emphasizes that this reorientation is critical for attracting longer-stay, higher-value visitors and supporting Macau’s diversification agenda. It also aligns with government policy objectives to reduce gaming’s share of the local economy and expand international tourism. Non-gaming revenue accounted for 17 percent of operators’ business mix in 2024, nearly triple the level recorded a decade earlier.
Regulatory constraints create strong moats
The research reiterates that Macau’s tightly controlled regulatory framework—including a cap of 6,000 gaming tables, a six-license regime, and strict oversight from the Gaming Inspection and Coordination Bureau (DICJ)—remains a major source of competitive advantage.
Morningstar classifies all six concessionaires as ‘narrow moat’ operators, reflecting substantial intangible assets arising from licensing exclusivity and constrained supply.
Macau’s status as China’s only legal casino market further strengthens operators’ competitive positioning and supports the sustainability of economic profits.
The analyst also flags significant long-term licensing risks beyond 2032, cautioning that future concession cycles carry considerable uncertainty. Potential increases in non-gaming revenue requirements, tighter regulatory burdens, possible tax adjustments, and higher mandated capital spending—particularly in support of Macau–Hengqin integration—could weigh on returns after the current concession period ends.
Competitive landscape to shift with major non-gaming launches
Macau’s competitive landscape is expected to shift noticeably in 2026 as a new wave of non-gaming projects, room additions, and upgraded premium products come online.
Analyst notes that these enhancements—particularly in hotel capacity and high-end amenities—will directly influence operators’ share of the mass and premium-mass segments.
Sands China is positioned for meaningful gains as Londoner Phase 2, launched in April 2025, continues to ramp up.
The expansion introduced 1,500 suites and 900 rooms, significantly strengthening the operator’s premium inventory and supporting a broader push toward longer-stay visitors. Galaxy Entertainment is also set to benefit from the full opening of the Capella at Galaxy Macau, which adds 100 ultra-luxury suites and complements the company’s strategy of expanding non-gaming events and entertainment offerings.
MGM China is expected to defend market share as it enhances premium-mass facilities and refreshes room products, even without major capacity additions. By contrast, Wynn Macau may see modest share pressure as its renovations, including new villas, suites, and dining concepts, temporarily limit competitive momentum.
SJM Holdings is projected to face the steepest disruption, with the closure of all satellite casinos by end-2025 and the transition of L’Arc Macau affecting near-term performance before table redeployments support longer-term recovery.
https://agbrief.com/intel/deep-dive/11/12/2025/macau-casino-margins-poised-for-decade-of-expansion-morningstar/?utm_source=Asia+Gaming+Brief&utm_campaign=daab18e80c-AGB%3A+%2302287+Friday%2C+12th+December%2C+2025&utm_medium=email&utm_term=0_51950b5d21-daab18e80c-%5BLIST_EMAIL_ID%5D&ct=t%28AGB%3A+%2302287+Friday%2C+12th+December%2C+2025%29&goal=0_51950b5d21-daab18e80c-%5BLIST_EMAIL_ID%5D&mc_cid=daab18e80c&mc_eid=31e20475e6
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