Tough times ahead for Macau, says Ho

Casino mogul Lawrence Ho has warned Macau’s tough operating environment is to persist, reports The Australian.

As part of Melco International Development Group’s annual report, Ho said despite the tough conditions in Macau, he remains optimistic about the region’s outlook, and that Macau was undergoing a transition towards a more mass market-focused business model.

“Looking ahead, although Macau is encountering a very tough operating environment, with a combination of the slowdown of economic growth in China and government policies that may adversely affect the gaming market, we believe our business approaches are in line with the government’s new direction from a macroeconomic and social perspective,” he said.

The report also said that global market volatility, China’s slowdown, crackdown on corruption, union pay restrictions and legislations implementing a full smoking ban were issues that could still play out.

However, Ho said he also saw positive signs that the market is stabilizing.

“Most notable here is the better-than-expected gross gaming revenue recorded in the first two months of 2016, and new government policies such as the relaxation of immigration processes for the PRC residents travelling to Macau using transit visas.”

Ho said he was also confident in the long term potential in the Philippines.

“Despite infrastructure challenges in the Philippines … the extension of the City of Dreams brand is expected to drive local tourism and eventually reinforce our presence in the region,” he said.

“Meanwhile, we anticipate the country itself will undergo further improvements and economic growth that will enable City of Dreams Manila to expand profitability and realise its full potential in the foreseeable future.”

With Melco Crown’s results expected later this week, Bernstein in a note on Friday said it anticipates the slow ramp up at Studio City to be a drag on earnings in the near term, while City of Dreams Macau maintains its strength in the high-end segment of the market.

“However, we continue to see long-term value in MPEL on the strength of its CoD Macau business and growth (albeit lower than initially thought) at Studio City,” said Bernstein.