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Underpenentration, new room supply drives mass

Hotel capacity expansion and Chinese market under-penetration will drive growth in the mass market, read a report from Bernstein on Friday.

While Macau attracted a total of 20.5 million Chinese visitors in 2016, the city saw roughly 9.9 million ‘unique visitors.’

The figure, according to Bernstein, makes up 3.2 percent of the “addressable market” in China - (i.e. an annual income of over US$15,000, and of the correct age group) approximately 300 million.

This compares to the US gaming market, which sees a 25 percent penetration rate of its

In regards to new hotel supply, higher spending overnight visitors and a decline in ADRs led to a recovery in occupancy rates beginning mid-2016.

According to the brokerage, this, coupled with increasing hotel room supply would benefit the mass and low-tier premium market.

“The new supply of hotel rooms and accompanying amenities should drive Macau's long-term growth in Mass (Base Mass and low-tier Premium).”

“With the growth of hotel room capacity in Macau, we examine the number of overnight visitors that can be supported in Macau. We estimate that the capacity of Macau hotel rooms will grow at a CAGR of 6 percent from 2016 to 2020E, which can support overnight visitation CAGR of 10 percent with hotel occupancy increasing to ~90 percent,” said the brokerage.

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