Macau’s casino industry started experiencing a turnaround from August 2016 after going through 26 consecutive months of gross gaming revenue (GGR) decline. One of the reasons for the turnaround is due to the fact that the Chinese government has finally reduced the pressure of its anti-corruption crackdown targeting the casino industry and high-rollers.
The crackdown saw the collapse of the lucrative VIP gaming market and also a reduction in the number of visitors from the Mainland to Macau. Things have turned around during the last 6 months and there are some casino operators who believe that the worst is now over and Macau’s casino industry will fully recover.
Bernstein Releases New Report
However gaming analysts have warned that it is too early to be optimistic about the future of Macau’s casino industry and a recent report from brokerage Sanford C. Bernstein Ltd provides more information on Macau’s casino industry and the possibility of a recovery in the future. The report is over 200 pages and looks at Macau’s casinos, visitor numbers and the tourism industry in Macau.
The report stated that in 2016, Macau welcomed close to 20.5 million visitors from Mainland China. Close to 10 million or 40 percent of these visitors were unique visitors while the remaining 10.5 million visitors were repeat visitors i.e. those returning for a second time in the same calendar year. Other firms that have researched the Macau market, have pointed out in the past that the majority of tourists who visit Macau stay away from the casinos.
20 Million Visitors From Mainland China
The IFT Tourism Research Centre (ITRC) conducted a survey in 2016 which showed that only 26 percent of the visitors surveyed admitted to gambling at Macau’s casinos. Macau’s casinos in recent times have focused on expanding their non-gaming offerings in an attempt to bring in more of a family crowd.
The Macao Government Tourism Office (MGTO) stated at the start of this year that the total number of mainland Chinese visitors in 2016 were close to 20 million and 44 percent of these visitors came from Guangdong province, which is the province that is the nearest to Macau. The Bernstein report estimates that the number of unique visitors from Guangdong province to Macau was around 9.8 percent.
Macau Casino Market Shift
The report also highlighted the fact that the Macau casino market was in transition at the moment and had shifted from being a VIP gaming market to one that is now a mass market. As a result, Macau’s casinos are also making the shift and are concentrating on mass market gamblers by customizing their offerings to this growing market. One of the shifts includes making more hotel rooms available so that these visitors can stay overnight.
The Bernstein report went on to say that “There are now nearly 36,000 hotel rooms in Macau and hotel room availability is often limited on weekends and holidays (the peak travel periods), with hotel occupancy rates generally circa 95 percent or higher during many of these times. However, Macau’s hotel room inventory is increasing by nearly circa 6,400 between 2016 and 2018 (9 percent compound annual growth rate, 28 percent cumulative increase).”
Macau Casinos To Focus On Mass Market Gamblers
The report states that it is highly unlikely that Macau’s casino industry will ever go back to the old days and be solely high-roller dependent. The VIP market once contributed more than fifty percent of GGR. The future for Macau’s casinos according to the Bernstein report is with mass market gamblers and the brokerage firm expects the mass market to grow at an 11 percent compound annual growth rate from 2016 to 2020.
The Wynn Palace and the Parisian Macao which opened in August and September 2016 have customized their offerings to cater to this mass market segment and have played their part in helping Macau’s GGR turnaround.
Hengqin Island
The Bernstein report also pointed out that Hengqin Island, which is part of the Mainland and located next to Macau is currently being developed and will host a number of non-gaming attractions that is expected to compliment Macau’s casinos. The recovery of Macau’s casino industry and the development of non-gaming activities on Hengqin Island are expected to boost tourist numbers from Mainland China.

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