Macau Casinos Get Lucky Money Ahead of Lunar New Year
Gamblers booked into Macau resorts over the Lunar New Year can already count themselves lucky as accommodations are sold out, boosting revenue for operators including billionaire Sheldon Adelson’s Sands China Ltd. (1928)
Seventeen major casino hotels in the world’s biggest gambling hub were fully-booked for Feb. 12-14 for the weeklong Chinese holiday that begins on Feb. 10, according to Karen Tang, a Hong Kong-based analyst at Deutsche Bank AG. The surge may help boost monthly casino revenue 15 percent from a year earlier to $27.9 billion patacas ($3.5 billion), she said.
Sands China, Lui Che-woo’s Galaxy Entertainment Group Ltd. (27) and Melco Crown Entertainment Ltd. (6883) may benefit most from holiday bookings after adding attractions and expanding in the city’s more recently developed Cotai strip, the Asian equivalent of Las Vegas strip, according to Lantis Li, an analyst at Capital Securities Corp (6005) in Hong Kong. The Lunar New Year is China’s most important holiday and traditionally a peak time for travel.
“For resorts, this is almost like reaping the windfall of lucky money,” said Li. Lucky money, also known as “Hong Bao” in Mandarin or “Lai See” in Cantonese, refers to the traditional New Year gift of cash.
Sands China gained as much as 1.8 percent to HK$36.75 before closing 0.8 percent higher at HK$36.40 in Hong Kong today. Galaxy rose 3.9 percent, Melco Crown added 1.3 percent, SJM Holdings Ltd. (880) rose 7.6 percent, Wynn Macau Ltd. rose 4.4 percent and MGM China Holdings Ltd. (2282) added 2.8 percent.
Melco Crown Chairman Lawrence Ho said his employees told him there was “literally physically fighting over rooms.” Speaking on a conference call to discuss earnings, he predicted Macau, site of China’s only legal casinos, would be “jam packed” over the holiday.
“Demand for hotel rooms is exceptionally strong with 100 percent occupancy,” Yoko Ku, a spokeswoman at Galaxy Entertainment, said in an e-mail responding to a Bloomberg News inquiry.
Sands China has been adding more hotel rooms under the Sheraton brand and received government approval for more gaming tables at Sands Cotai Central, its newest resort that opened in April.
“The novelty factor will drive more mainland visitors to Cotai,” Capital Securities’ Li added.
Starwood Hotels & Resorts Worldwide Inc. (HOT) operates Macau’s biggest hotel under Sheraton brand at Sands’ latest resort with 3,900 rooms.
Sheraton Macau “is fully-booked for the first three days of Chinese new year,” Josef Dolp, managing director of Sheraton Macau, said on Jan. 28.
Sands China has 9,210 hotel rooms in Macau, which account for about 40 percent of the city’s hotel room supply, while Galaxy has more than 2,700 hotel rooms.
“Even though Sheraton’s new Earth Tower had only just opened last week, it is already fully booked on four out of eight days,” Tang of Deutsche Bank wrote in a report. These advance booking trends seem even stronger than last year’s October Golden Week.’’ October Golden Week refers to the 7-day National Day holiday.
Sands which operates the Venetian, Macau’s biggest casino resort, plans to invest at least $2.5 billion to build its fifth integrated resort, to be called the Parisian, in the former Portuguese colony.
The Parisian, which is scheduled to begin construction in the second quarter this year, will have a replica of the Eiffel Tower, 3,000 hotel rooms and other family-oriented facilities to attract middle-class gamblers from China, who provide wider margins.
Macau casino revenue climbed 14 percent to a record 304 billion patacas ($38 billion) last year.
“Growth in Macau is supply-driven,” said Li of Capital Securities. “As long as we have more hotel rooms to support the increase in the number of travelers, the growth can be sustainable.”
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