Wynn’s Macau Money Machine Draws More Competition

May 31st, 2012 by Trefis Team
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WYNN: Wynn Resorts logo
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Wynn Resorts

Due to the impressive growth rate, the Macau industry has gained paramount importance in the gaming world. It reported $33.5 billion in gaming revenues in 2011, more than five times the gaming revenues collected on the Las Vegas Strip. The robust growth and the saturation in the U.S. gaming industry has intensified competition in the region. All major gaming companies including Las Vegas Sands (NYSE:LVS), Wynn Resorts (NASDAQ:WYNN) and MGM Resorts International (NYSE:MGM) are looking to establish or expand presence in the region.

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Macau: A lucrative location for gaming companies

  • Macau has attracted the interest of casino operators as it is relatively shielded from the repercussions of the world economy. The U.S. gaming industry has saturated and the economic recession of 2008 slowed the growth of the Las Vegas gaming industry.
  • All of the major global economies including U.S. and Europe are struggling with macroeconomic concerns. The U.S. economy is presently recovering, but it is still early to say how long it would take to reach its pre-recession levels. On the other hand, Europe is juggling a volatile economic environment. The impending euro crisis has made the situation more grim.
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Competition Intensifying

  • LVS enjoys a dominant presence in Macau and operates through the Venetian Macao, the Sands Macao and the Four Seasons Hotel. In April this year, it strengthened its position by opening the first phase of Sands Cotai Central. The resort is expected to be fully operational by 2013.
  • Wynn operates in Macau through Wynn and Encore. It currently derives approximately 60% of its revenue from Macau region, and it recently received permission to commence construction work for its proposed resort on the Cotai strip. The resort is expected to be fully operational by 2015-2016.
  • According to reports, Melco Crown is presently seeking approval to build its third casino, Studio City, on the Cotai strip. [1]
  • Recently, Marriott International announced a partnership with Galaxy Entertainment to launch The Ritz-Carlton, Macau and the JW Marriott Hotel Macau in the second phase of the Galaxy Macau. These two hotels will mark Marriott International’s first presence in Macau. [2]

It looks like Macau will be home to many new resorts in the coming years. It is still to be seen how casino operators would respond to increasing competition which could surely take a toll on their margins.

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Notes:
  1. See: Melco Crown profit soars, Macau Daily Times [↩]
  2. See: Marriott International and Galaxy Entertainment Group Announce the Ritz-Carlton and JW Marriott Hotels in Macau, Company Website [↩]