Fitch sees Macau GGR growth of 13 percent for 2018

Fitch Ratings says it expects Macau’s gross gambling revenue to gain 13 percent in 2018, moderating from a 36 percent spike recorded in January.

The firm said the outlook takes into account increased table and room inventory, including MGM Cotai, which opened this month and the new Morpheus hotel tower at the City of Dreams due to open in spring. Fitch said the new openings will largely be geared towards the premium mass market.

“Longer term drivers include continued infrastructure enhancements in and around Macau and China’s growing middle class and propensity to travel,” it said in its Eye in the Sky series. “The 2018 forecast’s moderation also takes into account VIP’s more volatile nature. For most operators, VIP represents less than 20 percent of EBITDA.”

In terms of risks, Fitch points to the ongoing vulnerability to changes in policy in Mainland China, such as restrictions to cash, or a crackdown on corruption. Revenue in Macau will also be susceptible to macroeconomic conditions in China and increasing competition from other jurisdictions.

“Positive considerations include improving transportation infrastructure in and around Macau and a steady shift toward the more stable mass market.”

Macau’s gross gambling revenue jumped 19.1 percent in 2017, coming back after three years of declines, though the pace of growth moderated in December.

According to figures from the Gaming Inspection and Coordination Bureau, the cumulative total for the year was MOP 265.74 billion ($33.02 billion).

Though figures for January were strong, analysts say revenue generated over the key Chinese New Year holiday was disappointing.

According to Bernstein Research, GGR from Feb. 1 to 19 was MOP13.5 billion, making an average daily rate of MOP710 million. The ADR is 16 percent less than January and down 3 percent from December.

Bernstein says assuming ADR remains in the range of MOP1.05 billion to MOP1.25 billion for the rest of the month, February’s GGR will be flat to up 8 percent.