Macau’s VIP market is showing strong signs of recovery through the opening months of 2023, with Direct VIP stepping up to claim some of the ground lost by the collapse of the junket industry.
The assessment was offered by JP Morgan analyst DS Kim in a Wednesday note after Macau’s DICJ published February GGR results showing Macau’s operators generated gaming revenues of MOP$10.32 billion (US$1.28 billion) – 33% higher than the same month last year.
While Kim said the February numbers suggest VIP GGR was only back to 15% of 2019 levels, compared to 65% for mass, he also noted that this dispelled suggestions that VIP as a whole was dead.
“VIP, still pre-dominantly considered ‘gone’ with the demise of junkets, clearly shows signs of recovery with direct/in-house VIPs (which has already recovered to well above pre-COVID levels thanks to conversion of junket patrons),” he wrote.
“We feel good about the pace and magnitude of Macau recovery, which we expect to continue.”
In the company’s 4Q22 earnings call overnight, Melco Resorts & Entertainment’s Chief Operating Officer, Macau Resorts, David Sisk, said the company has seen premium players from Hong Kong and Southeast Asia return since the start of the year.
“We made a concerted effort a few years ago back in 2019 to really start trying to move some of that junket business, some of those bigger players to our premium direct business,” Sisk said. “And the team has worked really hard on that which I think has paid dividends for us as we’ve come into a recovery period in 2023.
“Additionally, we’ve seen a lot of our premium direct play now return not only from Hong Kong but also Southeast Asia and that continues even up to tonight. We’ve seen that not only during Chinese New Year but throughout February and we’re seeing that in March as well there already. So that play coming through from the junkets doesn’t seem to have impacted us quite as much because of the efforts that we had back a few years ago in terms of really trying to migrate more of that play over to premium direct.”
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