New supply pressuring room rates: Wells Fargo

New supply is pressuring down Macau hotel rates, with ‘same-store’ rates down 13 percent year-on-year in September, according to Wells Fargo analysts in a note on Friday.

“For the past 18 months, we have been tracking forward hotel room rates in Macau, much like our weekly Vegas Roominations. Our forward survey is showing material pressure on hotel rates from new supply – with same-store rates down 13 percent year-on-year in September, and down 20 percent year-on-year in October and November.”

The brokerage also notes that the opening of Wynn Palace, Parisian Macao, and Studio City has seen Cotai Strip supply up 17 percent year-on-year.

In August, hotel room rates dropped 12.2 percent year-on-year, according to the Macau Government Tourism Office (MGTO).

However, average hotel occupancy was strong, reaching 92.6 percent, up 4.4 percentage points compared to 88.2 percent in August 2015.

According to the MGTO, the increase in hotel occupancy rate is likely attributable to the decrease in hotel room rates, which averaged at MOP 1,250 ($156) per night, down 12.2 percent compared to a year ago.