HONG KONG - A change in the type of customers coming to Macao has seen smaller casino operators MGM China and Wynn Macau reap rewards, while larger rivals Sands China and Galaxy Entertainment rush to catch up.

As visitors gravitate back to the world's biggest gambling hub, the recovery has shifted towards affluent premium mass customers, whose individual bets at high-limit baccarat tables range from hundreds of dollars to a few thousand dollars.

"Macao is doing well but not all operators are enjoying that recovery," said DS Kim, an analyst at JPMorgan in Hong Kong.

Big operators like Sands and Galaxy have outsized exposure to the lower end of the mass market, hence their share momentum was not as good as they or the market had expected, he said.

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Galaxy and Sands China shares have fallen by 11.2 percent and 16.7 percent respectively since the start of the year, whereas MGM China and Wynn Macau are up by 46 percent and 15.7 percent over the same period.

Visitors to Macao are at 75 percent of pre-pandemic levels in 2019, government data shows, while gambling revenues are expected to reach 80 percent of pre-COVID figures this year

"For now, as traffic and gaming demand has not yet recovered to its 2019 levels, MGM China and Wynn Macau, given their relatively smaller size and premium mass-focused business, benefit from better operating efficiency including marketing and sales to premium clients," said Jennifer Song, an analyst at Morningstar in Shenzhen.

Game face

Visitors to Macao are at 75 percent of pre-pandemic levels in 2019, government data shows, while gambling revenues are expected to reach 80 percent of pre-COVID figures this year.

On recent earnings calls, the casino operators outlined their growth strategies.

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MGM China has benefited the most from Macao's recovery, with its gross gaming revenue share rising from 9.5 percent in 2019 to more than 17 percent this year. It was the only operator allowed an increase in gaming table numbers under a government reallocation from January 2023 and it is adding more villas and suites to its properties.

Wynn Macau, which is building a food hall, continues "to punch above our weight on a revenue per hotel room basis generating meaningful market share," CEO Craig Billings said.

Galaxy will open its high-end Capella Hotel next year and increase demand from the premium mass segment, said Ying Tat Chan, Galaxy's chief financial officer

But executives at Sands China and Galaxy, which have more tables, said their resorts are well-poised to catch up.

Galaxy will open its high-end Capella Hotel next year and increase demand from the premium mass segment, said Ying Tat Chan, Galaxy's chief financial officer.

Mass-market focused Sands China, which closed some hotel rooms and its 15,000-seat show arena for renovations in January, remains the biggest operator in Macao.

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CEO Grant Chum said revenue per patron was higher than before COVID, and as the number of visitors returned to pre-pandemic levels, Sands China would be "best placed to capture that growth when it comes".

The casino operators did not respond to requests for further comment.

Diversification

The focus on premium visitors also appears to be aiding with non-gaming spending, which was up 11 percent in 2023 to 71 billion patacas ($8.82 billion) compared with 2019, according to Macao's tourism bureau. That is a welcome sign for authorities mandating casinos diversify away from gambling into other attractions like shows, shopping and museums.

The non-gaming investments can also boost the casinos by bringing in more foot traffic, said Vitaly Umansky, senior analyst at Seaport Research Partners

The non-gaming investments can also boost the casinos by bringing in more foot traffic, said Vitaly Umansky, senior analyst at Seaport Research Partners.

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Attracting visitors outside of the Chinese mainland, which accounts for 70 percent of arrivals, is also a growing focus.

During the first week of May, the top spending gambler was for the first time ever a non-Chinese patron.

The high roller was one of more than 190,000 arrivals from South Korea this year, now Macao's largest source of visitors outside greater China.