Galaxy Entertainment Wants To Build Two New Casinos In Macau

Gambling companies in Macau were forced to come up with a new strategy in order to arrest their declining profit margins and establish a new customer base. Macau’s gambling revenues have declined for the 10th consecutive month due to the anti-corruption crackdown imposed by Beijing.

China’s President Xi Jinping has confirmed that the crackdown will continue and corrupt government officials and high spenders at casinos will be at the center of the crackdown. As a result, Macau’s casinos have decided to stop catering specifically to VIP gamblers and instead adopt a more family oriented strategy in order to build a new client base. The decline in Macau’s gambling industry has forced a number of companies to rethink and change their plans for expansion.

Galaxy Entertainment Group Ltd have decided not to adopt a cautious approach and will stick with their existing strategy of expanding operations in Macau. The company recently confirmed that it will go ahead and open two new casinos and follow a strategy that will once again lure VIP gamblers to its casinos. Galaxy is scheduled to open two new casinos on the Cotai strip towards the end of May.

The company released a statement which read

We remain optimistic in the longer-term outlook for Macau despite the current challenges and we are now absolutely focused on executing the openings of Galaxy Macau Phase 2 and Broadway at Galaxy Macau.

Galaxy released its first quarter report early which revealed that the company’s revenue fell by 32% and their adjusted earnings before interest, taxes, depreciation and amortization (EBTIDA) fell to 40%. One of the main reasons for the drop in revenue is due to the lack of business generated from the high stake and VIP market segment.

Macau’s industry analysts predict that the gambling market will continue to decline in 2015 and 2016 and casinos must be prepared to deal with heavy losses. Macau’s government recently decided to fix a cap on the number of daily visitors from Mainland China making it all the more difficult for casinos to build a strong client base. Most of the Macau casinos remain empty and the resorts have been forced to drop their room rates in order to fill them up.

Galaxy Entertainment is confident that they will be able to overcome these challenges and believe that in the next couple of years Macau’s casinos industry will start its recovery process.