Topics in this section: - New bridge, rail channel tourists and cash to Macau's casino hub - 2024 Hong Kong airport expansion, peninsula boost lifts Macau - Hengqin Island Resort has no casino, only entertainment - Investors eye Macau casino upgrades for profit boost - Arrivals growth to H.K., Macau flows in the double digits
These analyses are by Bloomberg Intelligence senior analyst Francis Chan and contributing analyst Margaret Huang.
Macau's position as a tourism hub makes its casino operators best-placed to benefit from the influx of visitors to the Greater Bay Area, driven by the Hong Kong-Zhuhai-Macau bridge and high-speed rail network. Hong Kong airport's 2024 expansion will be the next catalyst to visitor growth.
2024 Hong Kong airport expansion, peninsula boost lifts Macau
This analysis is by Bloomberg Intelligence senior analyst Francis Chan and contributing analysts Margaret Huang and Miranda Wang.
Expansion of Hong Kong International Airport by 2024 will draw more overseas visitors to the Greater Bay Area and widen the reach for demand from regional cities across China. This should boost Macau's overnight visitors and raise citywide revenue given ease of access. By 2024, Macau will have completed its new casino developments, supplying rooms and non-gaming attractions to capture demand and lengthen stay. Connectivity from the bridge to Macau also provides a needed revitalization for the peninsula -- the older part of the city. SJM, Wynn, Melco and Galaxy stand to benefit from increased traffic to this area, which has lagged in revenue vs. Cotai given its lack of new properties. Operators are hoping to upgrade their outdated peninsula-based properties to better capture a potential demand uptick.
Hengqin Island Resort has no casino, only entertainment
Galaxy Entertainment plans to open a Maldives-style resort on Hengqin Island, its first facility without a casino. Planning for the development continues, with three phases that will take seven or eight years. The resort will be on the island's southern coast, next to Guangzhou Chimelong's Ocean Kingdom theme park. Hengqin, a special economic zone neighboring Macau, is an important part of efforts to pare the city's reliance on casinos. Its resorts may draw more visitors to the region and encourage longer stays.
Chinese visitors to Macau can easily travel to Hengqin Island via the Lotus Bridge. In the past three years, Macau has drawn a monthly average of 1.7 million Chinese visitors. The average length of stay for overnight guests is 1.4 days.
Investors eye Macau casino upgrades for profit boost
Investors should track the timing of Macau casino operators' launch of upgraded amenities for signs of a profit boost through 2019. Amid an expected year of softer gaming revenue demand, each launch can be a catalyst for garnering a greater share of revenue or profit. We expect to see the debut from MGM Cotai's Mansion, its all-suite hotel that caters to high-rollers, to accelerate revenue gains and better compete with peers Wynn and Galaxy. Enhancements from Melco and Wynn Encore should also boost mainstream business, which should widen their margins. SJM should get an earnings boost when it opens its Cotai property by 2H, as it diversifies from the Peninsula and adds more hotel and gaming capacity.
Arrivals growth to H.K., Macau flows in the double digits
Chinese tourist arrivals to Hong Kong and Macau will continue to rise in the double digits, given the ramp up of the Hong Kong-Zhuhai-Macau bridge and enhanced connectivity via high-speed rail. Growth rates are exceeding 15% on a quarterly basis. Macau stands to benefit the most given its slew of casino resort attractions. Arrivals are also being boosted by a rise in same-day visitors to Macau, given the ease of access to numerous pick-up points via the airport and various stops in Hong Kong.
Growth in same-day visitors should drive greater spending. Despite being just a quarter of overnight-visitor spending on average, it supports non-gaming revenue for casino operators, widening margins. Sands' Venetian property stands to benefit most with its central cluster location and breadth of attractions.
