Fitch hikes Macau 2018 GGR growth outlook to 13%
International credit watcher Fitch Ratings raised its outlook on Macau’s gross gaming revenue (GGR) for 2018 on the back of a robust mass market segment.
In a statement, Fitch revised its earlier conservative forecast of 11 percent GGR growth rate to 13 percent as it forecast higher gaming and hotel room inventory from some of the city state’s Cotai casino resorts.
However, Macau’s GGR growth for 2018 will be slower than the 19 percent growth it posted in 2017.
The brokerage firm cited the openings of MGM Cotai this month, the Morpheus tower at City of Dreams this spring and the conversion of rooms to suites at the Parisian throughout 2018.
Fitch noted that their full-year forecast had taken into account more challenging year-over-year comparisons later in the year and the more volatile nature of the VIP segment.
Macau casino VIP gambling revenue growth outpaced overall casino gaming revenue growth in 2017, despite a mild VIP slowdown in the year’s final quarter. For fiscal year 2017, Macau VIP improved 26.7 percent to MOP150.7 billion ($18.77 billion), outpacing the 19.5% growth reported by the overall casino market last year.
“Fitch’s stronger mass market forecast is in large part driven by new luxury room capacity geared toward the premium part of the market coming online in 2018,” analyst Alex Bumazhny explained.
Assuming that there’s a rapid deceleration from 36 percent growth last month, Fitch said that the mass market and VIP segments will grow 16 percent and 10 percent, respectively.
While they’re more cautious on the VIP segment, Fitch said that it is now more sustainable compared to the previous years. It noted that the junket operators are more disciplined and more regulated after Beijing’s corruption crackdown.
Additional hotel capacity, on the other hand, will spur mass market growth over the long term, according to Fitch. The firm is seeing an upswing in the average length of stay by Macau visitors; infrastructure developments in and around Macau; China’s growing middle class; and China’s pivot towards a more service based economy.
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