The gross domestic product of Macau gaming revenue has declined for the second straight quarter. The financial giant, however, said in a report this past Monday that casino earnings in Macau “have not bottomed” and updated its 2019 gross gaming revenue (GGR) forecast to -3% compared to 2018.
Morgan Stanley analysts Praveen Choudhary and Thomas Allen reported that Mass-gaming revenue has stayed relatively steady across the first eight months of the year. Nonetheless, it was expected to drop at the end of the year. Besides, they said their concerns included slower premium mass business as well as slower growth in room nights sold, owing to delays in new hotel openings.
The expectation of September GGR growth of 4 percent year-on-year (after two months of negative growth) was not achieved, the analysts expect negative GGR growth in November/December.
The analysts added that the drop might be as a result of VIP revenue which has already deteriorated substantially over the past three months. The VIP play crashed in July amid a slowing economy and the ongoing trade war between China and the US. They predicted VIP revenue would end up being 17% lower this year compared to last year, and next year’s figure could be 2% lower than it was in 2018.
Morgan Stanley analysts believe 2019 will have seen a 10% year-on-year increase in Macau’s mass-gaming revenue, while 2020 will record a 7% increase.
According to a report published last Friday, the latest Gaming Sector Survey, 2018 saw a year-on-year increase in spending on “purchase of goods, commission paid and customer rebate” by 13.3%, 11.2% increase compared to 2017.
Last year was the fourth year in a row that the number of commissions paid out had increased, but the trend may not continue after this year’s weaker performance. The annual performance means that the local industry might not be able to pay out certain dividends like it did last year.