Date
20 October 2017
Macau casinos face double-digit growth in labor cost in the years to 2017, according to Deutsche Bank. Photo Bloomberg
Macau casinos face double-digit growth in labor cost in the years to 2017, according to Deutsche Bank. Photo Bloomberg

Labor cost weighs on Macau gaming plays

Macau’s top six casino operators have seen HK$72.6 billion (US$9.37 billion) wiped off their market value amid spiraling labor cost, the Hong Kong Economic Journal reported Friday.

It only gets worse.

Labor cost will rise 10 percent to 15 percent in the years to 2017 thanks to a labor shortage, the report said, citing a report by Deutsche Bank A.G.

That compares with a 5 percent to 8 percent increase in recent years.

Deutsche Bank said labor cost will continue to pose a major challenge to gaming operators in the foreseeable future.

Even if revenue grows, profit margins could remain depressed by up to 70 basis points, it said.

Gaming counters were down about 6 percent on average Thursday.

Wynn Macau Ltd. (01128.HK) slid 7.6 percent, making it the worst performing blue chip.

MGM China Holdings Ltd. (02282.HK) and Galaxy Entertainment Group Ltd. (00027.HK) both lost more than 6 percent. Sands China Ltd. (01928.HK) fell 5.8 percent.

Meanwhile, SJM Holdings Ltd. (00880.HK) has been forced to offer incentives to frontline staff after a few incidents.

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