Steve Gallaway’s predictions for 2016 appear in Asia Gaming Brief Magazine
Global Market Advisors’ Predictions for 2016
The pain in Macau is far from over, but the strong will survive
by Steven Gallaway
With the number of properties opening up on the Cotai Strip from now through the end of 2016, and the expectation that the VIP segment will continue to struggle due to PRC policies and an overall contraction in China’s economy, sufficient demand will not be there to support additions to supply (a basic concept taught to every student in Economics 101 class). While various Wall Street and Hong Kong analysts have correctly estimated 2016 gaming revenues (at least as much as possible when trying to project revenues based on a political policy rather than market demand), large contractions in EBITDA margins are to be expected. Operators now have much larger properties to feed in a market whose gaming revenues will at best be flat. The situation in 2016 will be analogous to the situation MGM faced with it opened City Center in the midst of the Great Recession. Put simply, 2016 is going to be a rough year for Cotai 2.0.