Macau’s gaming operators have broadly described the city’s competitive promo environment as improving, even as competition between the six concessionaires remains rife.
The issue has been a common point of discussion during recent earnings calls for the September 2024 quarter, with most operators noting that competition has stabilized while citing increased efforts to keep player reinvestment in check.
Earlier this week, Melco Resorts Chairman and CEO Lawrence Ho said he believed Macau was now past “peak promotional intensity”, adding, “For the healthy development of the entire market going forward, I hope that all the operators continue to do that because at Melco, our primary focus has always been on EBITDA. Hopefully, with the promotional environment stabilizing, we’ll continue to improve on our EBITDA margin model.”
Melco has been among the main critics of Macau’s “tough comps” this year, calling out in a previous earnings call the “crazy behavior” of some rival operators. That comment was seen by MGM Resorts CEO and President Bill Hornbuckle as a direct shot at his company’s Macau subsidiary, MGM China, which has seen its market share shoot up post-COVID on the back of the 198 additional tables it was granted when new 10-year concessions came into effect on 1 January 2023, as well as its early adoption of smart gaming tables. The Macau government was also forced to direct many concessionaires to rein in free drink and snack giveaways for fear it was negatively impacting the city’s small businesses.
Asked the same question about the current promotional environment in Macau during Wynn Resorts’ 3Q24 earnings call this week, CEO Craig Billings said it was “stable to slightly better … but it’s still very competitive.
“While the competitive environment in Macau is clearly intense, we continue to focus on maximizing EBITDA rather than purely market share,” he added.
Sands China President and CEO Grant Chum told analysts in late October that his company was carefully managing its player reinvestments at a time when it is also facing significant disruption from major upgrade works at its old Sheraton Grand hotel at The Londoner Macao.
“We’re really back to our core strategy, which is we compete on the basis of our products and the content that we bring despite the fact that, obviously in the third quarter, our disruption actually increased.
“We stick to our core strategy and we had a very strong quarter in how we managed customer reinvestments and still maintained market share relative to the second quarter despite rising disruption during the quarter.”
Melco’s President and Director Evan Winkler suggested this week that it is still too early to tell if Macau’s promo environment is on a glide path down but reiterated the feelings of others in the need to manage spending.
“From our standpoint, we certainly aren’t looking at any elevated promotional spending, we are looking at, through our new player launch, how do we best sort of retain our top players, how do we create an aspirational path for those mid-levels and how do we spend dollars effectively on bringing new people into the system?” he said, referencing the company’s recently overhauled loyalty program,
“So, I think it’s more of an allocation issue against the existing pool as we slowly bring [spend] down, but no major changes in the overall level.”
