The main reasons for the hesitation are the sheer size of the market – last year’s revenue was equivalent to seven Las Vegas Strips – and decelerating economic growth in mainland China.
But there are other issues causing disquiet, including the potential for new restrictions on mainland Chinese gamblers travelling to Macau, which has its own borders, and burgeoning competition in the region.
The 2008-09 global financial crisis showed what can happen to the gaming industry when the economy sours. Mr. Adelson’s Las Vegas Sands flirted with bankruptcy, lacking sufficient cashflow to meet debt obligations, and along with other cash-strapped rivals, halted construction projects in Macau.
However, a repeat of that scenario is unlikely, says Grant Chum, gaming analyst at UBS, because in 2008 many of Macau’s largest casinos had only just opened their doors.
In the years since the financial crisis, new resorts including the Venetian Macau, Stanley Ho’s Grand Lisboa and the Galaxy Macau have begun generating a lot of cash for their owners as the mainland Chinese economy averaged annual growth of more than 9 per cent and the number of mainland visitors rose nearly 50 per cent over the past three years. As a result, most Macau operators now have more cash than debt, says Mr. Chum.
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