Macau casino giant Galaxy Entertainment Group says it expects meaningful improvement in its VIP business this year and is bumping up the budget for the second phase of its Cotai expansion by HK$3.6 billion (US$464 million).
Fresh off a month of May in which the market enjoyed its second-best gaming revenue performances ever, Galaxy CFO Robert Drake said he sees new momentum in the high-end sector at both Galaxy Macau, the company’s Cotai flagship, and its StarWorld Hotel and Casino on the Macau peninisula.
“We are very pleased with how the market has done so far this year, we are sticking to our guns and say that it’s a high single-digit growth,” he told Forbes.
Galaxy grew total revenues 15% year on year in the first quarter to HK$15.2 billion (US$2 billion), but its VIP business only grew 0.3% .
“We’re not surprised to see that given the flow of macroeconomic conditions things were kind of flat,” said Mr Drake. “People just tend to be more cautious in periods of uncertain times like these.”
Gaming revenue market-wide in May rose 13.5% year on year in May to MOP29.6 billion (US$3.7 billion), bolstered by an improving economy on mainland China, a slightly more favorable calendar and an easy comparison with a particularly weak May 2012, when gaming revenue rose only 7.3%. Year to date, gaming revenue is up 14.2% over the first five months of 2012..
The second phase of Galaxy Macau, slated for completion in mid-2015, is now pegged at HK$19.6 billion, up from $16 billion, as Hong Kong-listed GEG continues to refine its plans for the burgeoning Cotai resort district, where all six Macau casino concessionaires have unveiled major expansion plans.
Galaxy plans to invest another HK$50 billion-$60 billion (US$6.4 billion-$7.7 billion) in two subsequent expansions at Galaxy Macau.
