Inside Asian Gaming

INSIDE ASIAN GAMING JANUARY 2018 26 FEATURE IN FOCUS liquidity remains abundant.” Notably, Morgan Stanley sees the VIP segment maintaining growth of 11% through 2019 as well. Industry-wide consensus is that Macau’s future inevitably lies in the mass market segment, which will be aided in the coming years by improved infrastructure and more five-star hotel rooms – leading to a better quality of customer who stay longer and spend more. However, as Bernstein analysts wrote in a recent study on Chinese consumer spending, “Considerable discussion occurs when we try to segment the market into VIP, Premium Mass and Base/Grind Mass, because the market is much more complicated. Aside from some of the clear differences between VIP and “cash” (ie. mass) customers, a case can be rightfully made that most gaming spend in Macau today is premium in nature.” With the average gaming spend by a mass market visitor to Macau sitting between US$450 to US$550 per trip – buoyed by the fact that profit margins in the mass segment are roughly four times higher than VIP – it makes sense that this is where the greatest opportunity exists going forward. But even with VIP eventually slowing, Bernstein expects it to grow at 5% compound annual growth rate (CAGR) over the next five years and 4.55% CAGR over the next 10. That may not be quite as lucrative as the heady days of February 2014, when VIP baccarat alone contributed 65% of Macau’s all-time record MOP$38 billion in gaming revenue, but it at least bodes well for VIP gaming’s sustainability. As Govertsen says, “There will always be demand for VIP in Macau.” MGM Cotai will help boost Macau’s VIP offerings when it opens on 29 January 2018 “The VIP resurgence has been reflected by the health of Macau’s junket operators, whose numbers tumbled during the height of the city’s two-year downturn.” Tak Chun Group CEO Levo Chan