The opening of Wynn Palace and Sands’ Parisian is expected to drive a faster market share shift from Peninsula to Cotai, say Morgan Stanley analysts.
In a note from the brokerage on Wednesday, Morgan Stanley said they preferenced stocks exposed to Cotai over Peninsula given positive signs coming from overnight visitors, mass revenue growth in Cotai and the lower pricing of Cotai hotel rooms.
“Macau overnight visitors grew by 2,800-3,200 per day year-on-year in 1Q/2Q16, similar to Cotai hotel room growth of 3,670 (St Regis, Studio City and Galaxy Macau Phase 2) since May 2015,” said the brokerage. Meanwhile, Cotai mass revenue growth outperformed, surging by 7 percent year-on-year in 16Q1 and 11 percent in 16Q2, compared to a 11 and 6 percent decline on the Peninsula.
In regards to Cotai hotel rooms, “our hotel survey on July 26 suggests that Parisian hotel rooms (3,000 in total) are priced at a 20 percent discount to Peninsula flagship hotels (MGM, Wynn, StarWorld and Grand Lisboa). Within Cotai, it is priced on par with Venetian, 50 percent discount to Four Seasons and 40 percent above Cotai Central (excluding St Regis). We consider the period from Sep 15th to Sep 25th for best available room rate (BARR) including 7 day advance purchase discounts.”
Wynn Palace is scheduled to open on August 22, while Sands’ Parisian will open on September 13, 2016.