An exciting market

Translation By: 
João Pedro Lau
Principal and analyst for Union Gaming Group, Grant Govertsen is upbeat about the future

Professionally, Macau and Asia are still great places to be, as the growth continues to happen, says the principal and analyst for the Union Gaming Group, Grant Govertsen. Born in the United States, he has been living here for the past seven years and will continue to do so, as everything keeps booming in this part of the world. Especially now that the momentum for gaming in Macau is positive again.

“The numbers were down for more than two years straight, so, as an analyst, it was very easy to do a year-on-year comparison; it couldn’t get much worse, so we’re finally seeing improvement,” he says.

The unknown is the VIP sector. “Clearly, the mass market sector has been growing for many months now, probably since late spring or even last summer,” he observes, mentioning the government “has mandated the mass market to be the future” and there is infrastructure being built. Yet, the VIP sector, considering that the anti-corruption campaign in Mainland China hasn’t ceased, is still “somewhat unexpected or unexplainable”.

For Govertsen, there’s no doubt about it: “By and large, mass market is the future of Macau, especially as it relates to casino operators.”

The six licensees have a much bigger profit margin in the mass market, compared to the VIP sector. “For every dollar of revenue on VIP compared to mass, they’re making roughly 10 cents of profit in VIP and 40 cents on mass.”

Furthermore, the analyst believes the Central Government in Beijing “does not want Macau to be just a playground for the rich”.

Plus, growth of the mass market will trigger Macau’s economy, be it through tax rates or jobs.

“Mass market takes a lot more people on the mass market side to generate the same amount of revenues than a handful of people on VIP; it’s a much more labor intensive business, so that means even more jobs need to be created,” he says.

Starting from 1995, he lived on and off in Las Vegas for a total of nine years, and saw the Las Vegas strip “beginning to transform itself into the modern era”. And he believes “a lot of transformation is still yet to come” to the territory.

“It sounds weird, simply because there’s not a lot of land left to develop here, but I think you’re going to see a lot of changes over the coming years, especially when you think about so much of what has opened up on Cotai, over the past couple of years,” he says. “That stuff was all designed five or six years ago; when they came up with the blueprints for these casinos the market was very different then, very much high-end and VIP focused than the reality it is today.”

So, looking at both gaming markets, Govertsen says in Las Vegas “constant change” has worked out pretty well.

“I go back to Vegas three or four times a year and each time I go back I see just a lot of new things; whether its restaurants, nightclubs or shows, whatever it is, Vegas is constantly evolving in order to keep the consumer happy and wanting to come back,” he says. “That’s something that Macau has never had to deal with.”

Now, with the changes in terms of development, the territory must adjust.

“Casinos still have a lot of work to do to figure out what this customer wants, and what that customer wants. I’m not sure if even the customers know what they want; the consumers in China are still very new,” he adds.

For Grant, it “has been fun” living here, partly because it is his first time living overseas, and partly because of “the massive growth spur,” which has made it interesting. “You look at Vegas and America, it’s very penetrated, there’s casinos everywhere. Here, there’s still growth to be had in Macau and you’re seeing growth in Vladivostok and in Cambodia, Vietnam and Manila,” he says, adding: “It’s fun to be based here where all these jurisdictions are within reach and accessible.”

As for hobbies, in Macau he doesn’t really do much other than work and have an occasional drink with friends.
“Back in the States I was into classic and antique cars and shooting guns; obviously, you can’t do that here!” he says.

In Brief

Legend Palace Opens
Macau Legend Development Limited opened the Legend Palace Hotel at Macau Fisherman’s Wharf last month. The hotel has 223 rooms and a few gaming tables, but the complete casino will have 91 slots and 66 live-dealer gaming tables.

Profits in VIP
Neptune Group Ltd, a Hong Kong-listed investor in the Macau VIP gaming sector, had a net profit of HK$25.9 million between June and December 2016. In the first six months of the year, the company recorded a net loss of HK$257.0 million.

Ponte 16’s extension pending
Casino investor Success Universe Group Ltd says it hasn’t yet submitted a new construction plan for the third phase of the hotel-casino complex Ponte 16 to the Macau government. The third phase will include a “mass-oriented” shopping mall, the firm’s executive director and deputy chairman, Hoffman Ma Ho Man, told news outlet GGRAsia.