As someone who, by the nature of the job, spends many hours poring over the finer details of revenue forecasts and results, I can’t help but wonder when we will move on from comparing current-day numbers with the heady pre-COVID days of 2019.
It’s not that the comparison is completely unwarranted if we are to peg 2019 as the benchmark for recovery; it’s more that, in many jurisdictions across Asia, it is not an apples for apples equation. Such are the foundational changes that have taken place over the past six years.
Macau is a case in point.
In 2024, gross gaming revenues in the SAR totaled MOP$226.8 billion (US$28.3 billion), up 23.9% year-on-year and showing solid recovery from the ravages of the pandemic: when GGR fell to as low as MOP$42.2 billion (US$5.3 billion) in 2022.
A slower year-on-year growth trajectory of between 5% and 8% is anticipated in 2025, although some industry commentators have pointed out that the 2024 figure only represents recovery back to 77.5% of 2019 GGR levels.
This is a flawed metric, because that pre-COVID figure was artificially boosted by the influence of the junket industry and the inflated revenue numbers it produced. Importantly, when it comes to the VIP junket sector, revenue and profitability are two very different things.
The easiest way to look at this is by comparing EBITDA recovery rather than raw revenue numbers.
As mentioned, Macau’s 2024 gross gaming revenue reached 77.5% of 2019 levels, however industry Adjusted EBITDA is estimated to have reached around 89% – a considerably better recovery rate than GGR alone.
This is reflective not of a city that is struggling to reach the dizzy heights of before, but of one that has fundamentally shifted to a better quality of revenue. With the Macau government’s crackdown on junkets having rendered them largely obsolete – they are no longer allowed to engage in revenue share agreements with operators or to run their own VIP rooms within concessionaire casinos – the model has shifted towards a premium mass market, largely eliminating the need to pay out hefty junket commissions.
That has required a period of adjustment for Macau’s concessionaires, as evidenced by the billions being poured into developing and reconfiguring the high-end room inventory that caters to this rising premium mass segment.
But the end result will be a far healthier, and far more profitable, Macau gaming industry – regardless of what the revenue figures say.
