{"id":96262,"date":"2019-01-17T01:00:33","date_gmt":"2019-01-17T09:00:33","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=96262"},"modified":"2019-01-16T15:33:12","modified_gmt":"2019-01-16T23:33:12","slug":"melco-to-phase-out-all-vip-operations-at-studio-city-macau-by-2020","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/melco-to-phase-out-all-vip-operations-at-studio-city-macau-by-2020\/","title":{"rendered":"Melco to Phase Out All VIP Operations at Studio City Macau by 2020"},"content":{"rendered":"

Melco Resorts and Entertainment plans to close its VIP gaming operations at its Studio City<\/a> property, apparently for good. The company announced Tuesday that it would cease VIP rolling chip operations at the casino on January 15, 2020.<\/p>\n

\"Melco\"
Studio City was never meant to be a property aimed squarely at the VIP segment, but Melco\u2019s decision to shut down all casino gaming still comes as a surprise. (Image: Melco Resorts International)<\/figcaption><\/figure>\n

The surprise move comes a day after analysts for investment bank Maybank Kim Eng said that the enclave\u2019s stricter smoking laws and a slowing Chinese economy would combine to create a \u201cweak outlook\u201d for the VIP segment.<\/p>\n

Analysts predicted this week that Macau\u2019s gross gaming revenue would actually contract in January, for the first time in over two years.<\/p>\n

Macau was effectively \u201cbuilt\u201d by the VIP segment, which is overwhelmingly composed of mainland Chinese high rollers with a mania for high-stakes baccarat. It\u2019s a segment that once accounted for 60 percent of the enclaves\u2019 revenues, and which transformed it into the world\u2019s gambling capital, overtaking Las Vegas within four years of the 2002 liberalization of its casino market.<\/p>\n

Tactical Switchup<\/strong><\/h2>\n

But Melco hasn\u2019t given up on the segment just yet. In fact, the move is likely to be entirely practical, according to analysts from Sanford C. Bernstein, who said in a note on Wednesday that the operator will likely move the VIP tables to its other properties, where it will stand to make better gains.<\/p>\n

Macau has a cap on VIP tables per operator, but there is nothing to prevent operators from shuffling them around between properties.<\/p>\n

\u201cStudio City, which is 54 per cent owned by Melco, currently operates with 46 VIP tables (largely junket, but also direct VIP) and has had VIP tables since Q4 2016,\u201d read the Bernstein note.<\/p>\n

\u201cWhile there should be no impact on VIP in 2019 at Studio City (although focus on this segment will likely be reduced) in 2020 the key will be for Melco to put the 46 tables to better use —\u00a0 generate higher economic return on these tables at City of Dreams (and potentially Altira).\u201d<\/p><\/blockquote>\n

Changing Face of Macau<\/strong><\/h2>\n

Studio City opened in October 2015, a joint venture between Melco\u2019s Lawrence Ho and Crown Resorts\u2019 James Packer, although the latter sold his stake in the business in 2017. But the resort was never designed to cater purely for VIPs.<\/p>\n

\n

Launched in the midst of an economic downturn in Macau, triggered by Beijing\u2019s corruption crackdown — a campaign against graft and ostentation that that sent high-rollers skedaddling and Macau spiraling into a 24-month economic downturn — Studio City was focused on the mass market, as the enclave sought to curb its reliance on the VIP sector and dig itself out of a hole.<\/p>\n<\/div>\n

Macau bottomed out in the summer of 2016 and began a resurgence, driven by the mass market<\/a> and also, to its pleasant surprise, the gradual return of the VIP segment.<\/p>\n

That growth appears to be slowing, and meanwhile Melco has become focused on attracting a new key segment, defined as the \u201cpremium mass\u201d market. This is a wealthy, middle-class demographic that travels independently to casino resorts, rather than via junket operators, and bets roughly $250 to $400 per hand of baccarat.<\/p>\n

The VIP segment overall generates less than 10 per cent of the EBITDA for Studio City, and, these days, Melco believes the crucial segment to target for continued, sustainable growth lies elsewhere.<\/p>\n","protected":false},"excerpt":{"rendered":"

Melco Resorts and Entertainment plans to close its VIP gaming operations at its Studio City property, apparently for good. The company announced Tuesday that it would cease VIP rolling chip operations at the casino on January 15, 2020. The surprise move comes a day after analysts for investment bank Maybank Kim Eng said that the […]<\/p>\n","protected":false},"author":36,"featured_media":96264,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[62,10,18],"tags":[],"acf":[],"yoast_head":"\nMelco to Phase Out All VIP Operations at Studio City Macau by 2020<\/title>\n<meta name=\"description\" content=\"Melco Resort\u2019s Studio City will soon be the only casino in Macau with no interest in attracting the VIP segment. 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