Macau’s casino market smashed records and blew away even the most optimistic expectations for 2013, collecting more than $45.2 billion in gaming revenues during the year.
The figure exceeded 2012’s record total of $38 billion by 18.6 percent. Most analysts previously predicted the Chinese gaming market would grow by 12 percent to 15 percent in 2013.
As a comparison, Macau is now collecting seven times the total annual gaming revenues produced by the Strip. Las Vegas casinos collected $6.2 billion in gaming revenues in 2012. Through November, the Strip is up 3.9 percent with December’s totals to be released later this month.
“Based on numerous conversations we’ve had with casino operators over the past few weeks, we find no reason to alter our bullish stance on Macau as we head into 2014,” said Union Gaming Group principal Grant Govertsen, who is based in Macau.
Macau’s Gaming Inspection and Coordination Bureau released the region’s year-end figures Thursday.
The record was helped by December, which produced Macau’s second $4 billion revenue month this year.
During December, Macau casinos collected $4.2 billion in gaming revenues, an increase of 18.5 percent over December 2012. In October, Macau set a single-month record of $4.6 billion in gaming revenues.
“The monthly result was well ahead of consensus expectations,” Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors.
Las Vegas Sands Corp., Wynn Resorts Ltd., and MGM Resorts International operate casinos in Macau, which has roughly three dozen large and small gambling halls.
All three Nevada companies are building new multi-billion resorts on Macau’s Cotai Strip region; the $4 billion Wynn Paradise, the $2.6 billion MGM Cotai and the $2.7 billion Las Vegas Sands Parisian. The developments are expected to all open by 2016.
The Cotai region is transforming Macau into an overnight destination for middle-class Chinese. The market had been viewed as a place for day-trip gamblers whose revenue was secondary to the revenue produced by superwealthy high-end players staying in the casinos’ over-the-top suites.
Within its Sands Cotai Central complex, Las Vegas Sands operates three hotel brands — Conrad, Holiday Inn and Sheraton. Combined with The Venetian Macau and Four Seasons Macau, company’s properties on Cotai have 10,000 guest rooms.
Macau is the only legal gaming market in China.
Wieczynski said continued double-digit gaming revenue growth is expected in Macau, although matching 2013’s 18.6 percent increase may be a challenge because of a lack of new hotel-casinos opening this year.
“We believe better guest sourcing penetration into more remote regions of China, continued evolution of the mass market business and resilience within the VIP segment are capable of generating organic gross gaming revenue growth of 3 percent to 16 percent,” Wieczynski said.
One catalyst could come this month.
The major components of the Chimelong theme park resort on neighboring Hengqin Island — which is part of Mainland China — are expected to open before Chinese New Year begins at the end of January. The 1,880-room Chimelong Hengqin Hotel and Chimelong Ocean Kingdom, a theme park with ocean animals, aquariums and stadiums, are both expected to welcome visitors by the end of the month.
Govertsen said the theme park represents the first major Hengqin-related driver of visitation to Macau.
“We estimate the first full year of visitation to the theme park has the potential to range between 1 million and 2 million visitors,” Govertsen said. “Of these visitors, we would assume that roughly 70 percent would be adults and therefore could be targeted as potential gaming visitors to Macau.”
Govertsen told investors that gaming trends in Macau over the Christmas and New Year’s period have been “exceptionally strong” over the past two years.
“We would attribute much of this to increased Mainland enjoyment and participation of the holiday season,” Govertsen said. “This should spill over into January and ultimately into the Chinese New Year holiday period.”
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871. Follow @howardstutz on Twitter.