Macau's gaming revenue is projected to grow in 2025, but a weak VIP segment is expected to hinder a full recovery to pre-pandemic levels, according to S&P.
Macau's gaming industry is poised for continued growth in 2025, but its full recovery remains contingent on the strength of the mass market, according to a recent report by S&P Global Ratings.
While gross gaming revenue (GGR) is projected to increase by 5-6% year-on-year, the subdued performance of the VIP segment is expected to limit overall gains.
The credit rating agency predicts a significant surge in mass-market GGR, forecasting a 15-20% rise above pre-pandemic levels.
However, the report highlights a key constraint on overall recovery: junket, or VIP, volume. S&P Global Ratings suggests that unless regulatory changes occur, this segment will likely remain at its current low levels.
Consequently, total GGR is projected to reach only 80-85% of the levels seen in 2019, before the onset of the COVID-19 pandemic.
This forecast contrasts with the strong performance seen in 2024, where Macau recorded a GGR of MOP226.78 billion (US$28.25 billion), a near 24% increase compared to the previous year and exceeding the government's forecast of MOP216 billion.
The government's prediction for 2025 is MOP240 billion, approximately 11% higher than the 2024 forecast. While this demonstrates positive momentum, the S&P report suggests that achieving full recovery to pre-pandemic levels will require more than just mass-market growth.
The report also touched upon the performance of individual casino operators. Melco Resorts (Macau) and Sands China are expected to benefit from new enhancements and updated properties, leading to accelerated EBITDA growth.
Notably, MGM China Holdings has already surpassed its pre-pandemic EBITDA figures, demonstrating a strong recovery trajectory. The remaining operators are projected to reach approximately 90% of their 2019 EBITDA levels this year.
Despite the generally positive outlook, S&P Global Ratings cautioned about potential headwinds. Economic uncertainties and increased operating expenses aimed at attracting premium mass players could impact Macau's cash flow and leverage improvement.
Furthermore, ongoing development projects could potentially delay deleveraging or add incremental leverage. The agency also noted the potential impact of US operators like Las Vegas Sands Corp., Wynn Resorts Ltd., and MGM Resorts International bidding for New York casino licenses.
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