2019 has been a difficult year for Macau casinos, and analysts predict that 2020 will comes with relatively mild improvement of just 3%. In an industry that has registered double-digit growth in recent years, this could be a sign that testing times have arrived and they are here to stay.
What are the big issues in Macau?
According to Bloomberg, the upcoming year may not be a great sight for Macau resort and casino owners. One of the biggest gambling hubs in the world could face recurrent issues due to intense geopolitical and regulatory pressures. Bloomberg Intelligence contributing analyst David Bonnet commented,
“All of the juice has been squeezed out of the orange. Macau is starting to resemble more mature competitive markets such as Las Vegas and Atlantic City.”
According to their forecast, the revenue in the gaming hub would go from a 14% growth spree in 2018 to a 3% decline in 2019. In 2020, we may witness a 3% improvement, but that would be nothing compared to the history of the city. The Bloomberg Intelligence index for casino operators in Macau fell by 0.9% on Wednesday.
What is happening at Macau?
The US-China trade war took away some of the splendor of the city in the first half of the year. Operators expected the markets to recover in the second half, but they didn’t see good results. The protests in Hong Kong held back tourists from coming to the city because Hong Kong acts as a gateway to China for many foreign nationals.
The casinos have also experienced a declining number of VIP gamblers or high rollers. Many of these gamblers are now attracted to new high-end casinos in the rest of Southeast Asia. Even junket operators who act as middlemen for these deep-pocketed players have started shifting their focus away from China to other Asian countries.
Suncity Group Holdings Ltd. has identified an opportunity in Vietnam and is now preparing its first resort in the county in the first quarter of 2020. As Suncity is the biggest operator in the region, its new launch could take away a sizeable portion of high rollers from Macau to Vietnam. Japan is also becoming a big threat to Macau. After a landmark bill legalized casino operation in the country last year, it is set to become the second-biggest gaming hub in Asia. It could easily scoop Macau’s revenue. Some experts suggest that the Japanese GGR could be as high as $20 billion annually.