With several new resort venues in the works for the city of Macau, analysts believe that by 2017, the city will reach overcapacity. Morgan Stanley is warning that the gambling city will see a rise in competition or cannibalization based on the hundreds of gaming tables and thousands of guest rooms to be added to the venue by next year, thus create a margin erosion.
Analysts of Morgan Stanley are reporting that the city of Macau will have more than 6,000 guest rooms added by next year as well as 750 gaming tables. These additions will take place from the third quarter of this year until the first quarter of next year. Visitation to the city has declined based on year-on-year reports, but only 1% to 5.1 million visitors.
According to Fitch Ratings, Macau is set to have a relatively stable year but cannibalization should begin to take place as the openings of venues in Cotai. According to the Senior Director of Fitch Ratings, Alex Bumazhny, the VIP market softness and the depreciation of the yuan further could be challenging to the year-over-year comparisons of Macau but the analysts do not expect a broader economic slowdown to impact visitation in China.