Macau’s concessionaires may have seen gaming revenues take another dive to start the year but retail is well and truly on the rise, with Galaxy Entertainment Group reporting its second best retail quarter ever in 1Q22.
According to a note from Bernstein analysts Vitaly Umansky and Louis Li following GEG’s Q1 earnings call on Thursday, strength in retail was a feature of the company’s results – particularly in the luxury segment. The March quarter was the second-best retail quarter ever for GEG, behind only 1Q21.
It also follows similar performance in retail by fellow Macau concessionaire Wynn Macau Ltd, with Wynn’s CEO Craig Billings noting that the company had seen new customers coming to Macau from mainland China with “different customer motivations than perhaps historically we’ve seen – shopping motivation, leisure motivation and things like that.
“Part of the reason that’s the case is because Hong Kong hasn’t been accessible but that really piques our interest when we think about what the future development of Macau might be from a non-gaming perspective,” Billings added.
GEG’s retail results come with the company pivoting its gaming product away from VIP following the collapse of Macau’s junket industry in recent months. As highlighted in its 1Q22 results announcement, Galaxy Macau is the only of GEG’s Macau casinos to offer a direct VIP business with the focus now on “reallocating resources and marketing efforts to mass gaming customers, including promoting hotels, restaurants and other non-gaming amenities,” Bernstein said.
Despite strength in non-gaming, GEG revealed during Thursday’s earnings call that it is in “no rush” to open Galaxy Macau Phase 3 despite recently completing development.
“Phase 3 will likely begin with the Raffles Hotel area opening, followed by the Andaz and [Galaxy International Convention Center], and then the arena,” Bernstein said.
“Management indicated flexibility to reallocate existing labor to support Phase 3 opening (e.g. bring gaming staff into hotel and non-gaming), and headcount will be dependent on demand.
“We would not expect all Phase 3 to open in 2022.”
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