Macau’s Galaxy Entertainment Group (GEG) is reaping the rewards for successfully transitioning to a mass market focus, according to Union Gaming analyst Grant Govertsen, with revenue up 4 percent year on year for the second quarter of 2016.
In a report released overnight, Govertsen credited re-configurations to GEG’s main gaming floors for helping stimulate growth, with revenues of $HK12.2 billion between April and June exceeding expectations after more than two years of declining revenues across Asia’s gaming hub.
“Galaxy seems to be hitting its stride with respect to getting the mass story right at the right time with an increased focus on non-premium mass,” he said. “Significant re-configurations of both Galaxy’s and StarWorld’s mass market floors post 2Q16 suggest we should see continued follow-through into 3Q and should provide a good defense against new supply.”
GEG’s second quarter results are particularly notable given the long-awaited launch of Macau’s latest “top end” resort, Wynn Palace, earlier this week, with Govertsen noting a very different model being adopted on Cotai’s east compared to properties such as Galaxy and Broadway on its west.
It also comes as an encouraging sign for Sands China as they prepare to open the Parisian on 13 September.
“We continue to see a divergence in philosophy between the east side of Cotai, which we’re branding as “Millionaire’s Row” with a focus on premium customers, and the west side, which is dominated by properties with a much greater focus on the non-premium mass segment (Galaxy, Broadway, Venetian, Parisian, Studio City),” Govertsen said.
“This non-premium segment seems to be the one essentially endorsed by the government as the future of Macau and the one we’re most excited about on a long-term basis given its likely superior growth rate. We would expect Galaxy, when it does move forward with Phases 3 and 4, to primarily focus on the lower tiers of the market including the addition of more 3-star caliber rooms.”
GEG’s gross gaming revenue from the mass market segment grew by 29 percent year-on-year while VIP fell 13 percent.
