Macau’s casino industry achieved a remarkable milestone in the fourth quarter of 2023, with mass market gross gaming revenues (GGR) hitting an all-time high, equivalent to 105% of 2019 levels. In a recent note, investment bank JP Morgan highlighted the impressive performance despite macroeconomic challenges from China.
Record-Breaking Mass Market GGR:
JP Morgan analysts DS Kim, Mufan Shi, and Selina Li reported that mass GGR in Q4 2023 experienced a substantial quarter-on-quarter increase of 12% to 13%, reaching an unprecedented MOP$48.6 billion (US$6.03 billion). The achievement is particularly notable considering the well-documented macro headwinds faced by the industry emanating from China. The mass market segment has emerged as a significant contributor to Macau’s gaming success, showcasing resilience and adaptability.
VIP GGR Trends:
While mass market GGR soared, VIP GGR is reported to have experienced a slight decline of 3% to 4% quarter-on-quarter, maintaining its position at approximately 20% of pre-COVID levels. This observation provides insights into the dual dynamics at play within Macau’s gaming landscape, with the mass market segment demonstrating robust growth while the VIP segment experiences a modest dip.
Overall GGR Recovery:
The analysts noted a noteworthy milestone in December 2023, as it marked the first time since the onset of the pandemic that overall GGR reached 80% of pre-COVID levels. The recovery had been gradually progressing, reaching between 70% and 75% in the preceding months. Mass GGR specifically achieved an impressive 110% of 2019 levels in December, underscoring the sector’s resilience and capacity to rebound.
Prospects for Industry-Wide EBITDA:
Looking ahead to the results season in late January, JP Morgan is optimistic about Macau’s industry-wide earnings before interest, taxes, depreciation, and amortization (EBITDA). The bank anticipates a growth of 10% or more quarter-on-quarter, positioning the industry at 85% of pre-COVID levels. This projection reflects the positive momentum and financial strength observed in the sector, signaling a potential trajectory towards pre-pandemic performance.
Macau’s casino concessionaires have navigated through challenges and macroeconomic headwinds to achieve an unprecedented high in mass market GGR in Q4 2023. The resilience displayed, coupled with the recovery in overall GGR and a positive outlook for industry-wide EBITDA, paints a promising picture for the region’s gaming sector. As the industry adapts to changing dynamics, these achievements underscore Macau’s status as a global gaming hub and set the stage for continued growth and success in the coming months.