Gross gaming revenue in Asia’s big five markets is likely to rise about 11 percent a year on a compound average basis to reach $98 billion in 2018 from $59 billion in 2013, UBS said in a report on Asian markets.
It expects Macau and the Philippines to deliver fastest growth in the short term out of the major markets, which also include Singapore, Malaysia and South Korea.
The investment bank said new supply will surge over the next few years as multi-billion dollar integrated resorts open around the region. However based on its analysis of market penetration and gross domestic product growth, the jurisdictions aren’t likely to poach each others’ clientele for growth and won’t pose a threat to world leader, Macau.
UBS says the number of hotel rooms across the region will increase by 56 percent, gaming tables will gain 49 percent and slot machines will also be up by 56 percent from 2013 to 2018. Capacity growth will be the fastest in the South Korea and the Philippines, with the number of gaming tables up 150 percent and 130 percent respectively over the period.
The bank points out that penetration rates remain low and the operators’ main focus will be on boosting that level within a three-hour’s flight radius of their properties.
“There appears to be little overlap in core addressable markets (with the exception of Singapore and Malaysia) and therefore little competition between the gaming centres, as future supply remains focused on penetrating existing addressable markets,” it said.
Macau’s mass market penetration of the China population is only 2.7 percent, it said. Potential areas of overlap will be between Macau and Korea for customers in the Yangtze River Delta region and Macau and the Philippines in Guangdong and Fujian.
“However, Macau’s superior offering in both gaming and non-gaming amenities should shield it from material impact,” the report said.
Strong regional economic growth is likely to underpin growth in gambling demand in the region. The correlation between GDP and gaming growth is 0.88-0.96, the bank said, adding that GDP growth rates should remain steady.