VIP betting volumes have been going down but over the longer term the Asia Pacific gaming industry “will benefit from the under-penetrated and growing middle class, and improved infrastructure,” says Fitch Ratings in its 2015 outlook for the sector.
The ratings agency retained the stable outlook on the Asia Pacific gaming sector, saying that the performance of gaming operators in the region will “remain resilient” to lower VIP volumes.
“Our stable outlook for Asia Pacific gaming hinges on our expectation that the Chinese VIP segment is near a trough and will start to recover by the second half of 2015,” Fitch said.
“Continued sequential declines in Macau and worsening of Chinese macroeconomic factors may lead to a more negative view. Other factors would include the timing of new supply, including the potential legalisation in Japan and new casino openings in Vladivostok, South Korea, the Philippines and Australia,” it added.
Fitch, which expects growth in casino gross gaming revenue in Macau to be flat this year, forecasts gaming revenue to decline by four per cent year-on-year in 2015, driven by the weakness in VIP play.
There has been a contraction in VIP revenue in Macau since mid-2014 and growth is only expected to resume in the second half of 2015. Specific negative drivers include the anti-corruption crackdown and the tightening of credit in mainland China, the smoking ban imposed in October and tighter travel restrictions.
