Melco Crown Entertainment recently opened its $3.2 billion Studio City casino resort in Macau, which has had to change its operational strategy several times due to the country’s declining gambling revenue. The casino was forced to downgrade the hotel from a five-star property to a four-star property and change its player acquisition strategy from targeting VIP gamblers in mainland China to targeting popular market gamers.
It is strong evidence that Studio City did not allocate any special space in the junket room, as casinos in Macau drew more than 50% of their gambling revenue from VIP gamblers brought in by junket operators. The Chinese government’s anti-corruption crackdown has made it difficult for Macau’s junket operators to bring in regular VIP customers, and many of them are moving to other countries.
Lawrence Ho, co-chairman and chief executive officer of Melco Crown Entertainment Ltd, played a key role in making this critical decision to abandon the VIP market and focus on popular market gamers. Ho believes that the VIP market in Macau may recover in the coming months, but it will never return to its old heyday.
In a statement, Ho said, “I think we’ve seen the worst in Macau, but it’s really a question of when the real recovery begins. I think it’s too early to guess, but I think next year’s VIP will have some difficulties given the high base of the early part of the year. I think mass production has stabilized and hopefully we’ll see some reasonable growth.” 바카라
According to information released by the Macau government, total gaming revenue (GGR) to the VIP market in Macau decreased to $3.63 billion, a 38% decrease compared to the same period in 2014. The liaison office of China’s central government recently said it will look into its policies in an effort to encourage tourism in Macau and boost the casino industry. Ho said such a plan is important because Macau sent a message to gamblers in mainland China that it was safe for them to visit.
Industry analysts believe the Macau gambling market’s decline will continue into 2016, with the VIP market recovering at a slow pace compared to other market segments. The analysts directly link the decline in VIP gambling to political decisions and believe that significant changes will occur in the VIP market only when the regime changes in Beijing.