The Macau gaming landscape has slowly but surely recovered in the last couple of years and the market’s response has encouraged gaming operators to once again think about investing in the biggest gambling hub in the world. Las Vegas Sands Corp is one of these gaming operators who are eager to expand its presence in Macau and build more casinos and hotels in the region.
Fitch Ratings Expects Macau’s GGR To Keep Increasing
Last month, credit rating giant Fitch Ratings announced that they are expecting a 11 percent growth in Macau gross gaming revenue (GGR) for 2018 as the market continues to benefit from a healthy Chinese economy. Mass and VIP segments are also expected to grow at 14 percent and 9 percent year-on-year respectively, as operators reposition their assets towards the premium mass market. The premium mass market is now seen as the more stable segment in the industry as it is less dependent on credit and less volatile compared to the higher-stakes VIP segment.
As the city’s gaming industry switches to a mass orientation, Fitch forecasts Sands China Ltd to become best positioned to benefit from this long-term growth in Macau. Sands China Ltd, a subsidiary of Las Vegas Sands has big plans for the Macau gaming market in the coming years. The gaming operator is in the process of upgrading The Parisian’s hotel segment, building more suites for the Four Seasons and St. Regis, and spending US$1.1 billion to convert the Sands Cotai Central to The Londoner Macao, a reimagined city of London which is located in the heart of Macau.
Sands Investing In Multiple Projects To Boost Presence
The plans for the new ‘The Londoner Macao’ were revealed in October 2017 and the project is expected to be completed by 2020. The refurbished resort casino will feature a London-like experience with some of London’s most famous landmarks, an expanded retail mall, and 350 new lavishly designed suites. Sands Corp is banking on the success of The Venetian and The Parisian to draw more mass travelers to The Londoner Macao. Sands Corp is also looking to challenge the newly opened MGM Cotai resort and pose a stiffer threat.
After the completion of these preliminary projects, Sands China expects to increase their control of the four- and five-star hotel room supply in Macau to 35 percent by 2020. The company currently has around 12,500 hotel rooms in the peninsula and will increase capacity to 13,400 hotel rooms once their projects are completed.
Daniel Briggs, senior vice president of investor relations for Las Vegas Sands stated that their founder and chairman Sheldon Adelson believes that the company should keep building more hotel rooms in the market to sustain and even increase its footprint.
During the 2018 JP Morgan Gaming, Lodging, Restaurant and Leisure Management Access Forum which took place in in Las Vegas, Nevada last week, Briggs said Adelson is bullish about the growth of Macau.
In a statement, Briggs said, “Macau is just getting started, and that this business can be even bigger. But it is going to need more hotel inventory; we would like to build more hotel inventory besides what we have already announced. We will see if we get permission to do that. We don’t have permission today.”
Sands China Waiting On More Information Regarding License Renewals
Last year, Macau’s Secretary for Economy and Finance, Lionel Leong Vai Tac announced that the government of Macau is drafting new regulations regarding the renewing and awarding of casino licenses in the region. The government has yet to reveal details about their new licensing plans but they have already commissioned two studies on Macau’s gaming sector to give them more insight before they start drafting a revised casino concession plan for 2020. One of the topics that will be explored by the studies is the number of gaming licenses that should be allowed to exist in the market after the expiry of current operator licenses.
The six major gaming operators in Macau will see their gaming licenses to expire between 2020 and 2022. Sands China’s license is set to expire on June 2022 and as of now the government has still not provided any information as to when they will announce the new concession plans.
Wilfred Wong Ying Wai, president and chief operating officer of Sands China, said earlier this month that the operator has faith that the government is already working on the licensing plan and will reveal more information but at their own pace.  Wong also confirmed that Sands China is doing everything in line with the government’s demands from the casinos, including bigger investments in MICE (meetings, incentives, conferences and exhibitions) venues, and building more non-gaming facilities and attractions like malls, entertainment areas and hotels.

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