Fitch cuts Macau 2014 GGR forecasts on weak VIP

    Fitch Ratings has cut its forecasts for 2014 Macau gross gambling revenue to 10 percent from 12 percent because of weakness in the VIP sector.
    However, the agency points out that year-to-date, revenues are still up some 12.6 percent, above its initial full-year forecast of 12 percent growth made in December.
    It said the new forecast assumes low to single-digit declines in VIP revenue and 25 percent to 30 percent mass market growth for the rest of the year.
    Aside from the sensitivity of VIPs to China’s slowing economy, the sector has also been affected by a shift in tables towards the more profitable mass market, it said.
    “Mass market will continue to be supported by longer-term drivers such as improved transportation infrastructure and the growing middle-class in China, while VIP is more sensitive to macroeconomic factors in China,” the note added.
    Fitch said the upcoming smoking ban may have a “marginal” impact on the mass market when it comes into effect in October, but is unlikely to cause the level of decline seen in some other markets where smoking bans were implemented. That’s because of the lack of convenient, alternative options available to Chinese gamblers.
    The ban will not affect Macau’s VIP rooms.
    Macau’s GGR fell 3.7 percent in June in the first year-on-year decline in five, harmed in part by the distraction from the World Cup. Most analysts are predicting another soft month in July.