Deutsche Bank’s latest report unveils a striking revival in Macau’s gaming sector, with mass gaming revenues soaring beyond pre-pandemic levels. This analysis delves into the report’s findings, offering comprehensive insights into the performance of key concessionaires, the dominance of mass gaming, and the evolving landscape of VIP segments.
Rapid Revenue Rebound:
Macau witnessed an unprecedented surge in consolidated mass gaming revenues, catapulting by an astounding 414% year-on-year. Remarkably, these revenues surpassed 105% of 4Q19 levels, reaching an impressive US$5.94 billion for the quarter ending December 31, 2023. Total Gross Gaming Revenue (GGR) also experienced a remarkable ascent, hitting 75% of pre-COVID levels, amounting to US$6.77 billion, marking a staggering 421% increase from the previous year. However, VIP GGR remained relatively subdued, constituting a mere 23% of 4Q19 levels, totaling US$756 million.
Concessionaire Performance:
SJM Holdings’ recent earnings report marked the culmination of the 4Q23 earnings season for the six concessionaires. Notably, Sands, MGM, and Melco emerged as frontrunners, securing significant gains in mass GGR market share during Q4. Conversely, SJM, Galaxy, Wynn, and MGM witnessed notable upticks in VIP GGR market share.
EBITDA and Margin Insights:
The rebound in property EBITDA was robust, reaching US$1.94 billion, equivalent to 82% of pre-COVID levels. Despite this resurgence, industry margins experienced a marginal dip, settling at 29.0%, slightly below the 29.8% achieved in 4Q19. This decline can be attributed to a 16% reduction in net revenue compared to 4Q19 levels, alongside stagnant non-gaming tax-related operating expenses.
Macau’s gaming industry has showcased remarkable resilience and recovery post-COVID, particularly in the mass gaming segment. While VIP segments are yet to fully regain their pre-pandemic vigor, the overall performance signifies a promising trajectory for Macau’s gaming landscape, underscoring its enduring appeal and adaptability in the face of adversity.