Hong Kong Hotels & Leisure: Headwinds Eased by Favorable VIP Win Rates
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Abstract
In its Hong Kong hotels and leisure coverage, CITIC Securities Wealth Management (Hong Kong), citing CLSA research, expects Macau gaming's adjusted EBITDA to decline year on year in Q3 2026, reflecting softer gross gaming revenue (GGR). Visitor data illustrate the mix problem: total arrivals in July and August rose 4.5% year on year to 8.02 million, but overnight visitors fell 2.5% to 3.05 million, indicating that day-trippers are not converting into GGR growth. Margin pressure is being temporarily cushioned by above-normal VIP win rates of 3.00-4.10%. Adjusted EBITDA as a share of total GGR expanded quarter on quarter in Q3 2026, yet remains below the equivalent 2025 level. The analysis views elevated VIP win rates as cyclical rather than structural. The house maintains a neutral view on the sector over the next six months, arguing that with GGR growing only modestly, scope for margin expansion is very limited. Post-Golden Week data will be key to judging 2027 GGR. The report names no specific stock recommendations.