Strength in the Macau retail set-up and the focus on non-gaming tourism will help the city face long-term risks, according to investment research company Bernstein.
As Macau’s gaming market continues to shift toward a mass focus, the non-gaming business of casino owners will become more important, says the company, noting that mass-market revenues have already exceeded 50 per cent of gross gaming revenues in the former Portuguese colony.
Bernstein says it believes this shift in the market will continue, driven by incremental capacity expansion – new hotels, casinos, retail and entertainment – and improvements in transportation infrastructure improvements which will help attract more tourists and greater custom from China.
Macau’s luxury retail market will be a key performer in the long term, says Bernstein, which will be further supported by new integrated resorts creating a critical mass on Cotai.
It believes the risk of retail cannibalisation is low as “visitors are somewhat ‘captive’ to their hotels given the short length of stay in Macau and the increasing sophistication of loyalty programs.”
Bernstein says the key will lie in whether Macau can successfully broaden its tourism offerings, transform into a regional tourism hub and sustain the pipeline of new developments for the next two years.