Las Vegas Casino Operators See Dive in Macao Business

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  • Macao’s VIP business suffers the consequences of the US – China trade war
  • The Las Vegas Sands Corporation, MGM Resorts International and Wynn Resorts Ltd. all report on slumps in VIP business revenue
  • Business analysts remain optimistic for the long-term future

Business reports from Macao display a market-wide revenue decrease of 13.4% year-on-year for the first quarter of 2019, mostly affecting the VIP segment.

Vegas Brands Suffer the US – China Trade War

Ongoing protests in Hong Kong and the escalating tension of the US – China trade war have started taking their toll on the VIP business segment in Macao. A total of nine casinos, operated by Las Vegas Sands, MGM Resorts International and Wynn Resorts, have felt the consequence most of all. Vegas Sands relies on Macao operations for about 70% of their revenue, Wynn Resorts – 64% and MGM the least of about 22 per cent.

Out of the three, Las Vegas Sands reported a net profit of $582 million for the first quarter of 2019, which amounts to a 60% nosedive in comparison to 2018’s $1.46 billion for the same period. The company reported a growth in net revenue supported by revenue growth in the mass market segment in Macao. Nonetheless, president and chief operating officer of Las Vegas Sands, Robert Goldstein, remained optimistic about the future of the enterprise and shared plans for its further development in Asia.

Wynn Resorts, on the other hand, did not manage to reach their expected figures, as reported by the business in the results of its latest earnings. Their Macao operation saw a 15.3% decrease in overall results and reported a 22% dive in earnings, as well. Both of Wynn’s properties suffered lack of interest in the VIP segment.

Jim Murren, chief executive of MGM Resorts, also reported a weaker quarter in MGM’s call to investors last month. The cash flow of the enterprise went down by some $10 million.

Long-term Perspective Remain Optimistic

All things considered, this may prove to be only a temporary resolve, though, as a Jeffries report from July revealed that the 5 to 6 percent VIP segment decline was actually balanced by a 5% increase in month-over-month daily revenue for mass markets. Other business analysts also remain fairly confident in the bright financial future of the industry.

Despite the fact that no one is certain how the trade war will carry on and / or when it will settle, most agree that it will not affect the gaming and resort industry in a manner, which would require a drastic change in strategy.

While this scenario unfolds and large-scale casino operators remain in weight for their VIP revenue to pick up again, focusing on the mass audience still remains a stable source of income.

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