In a new report, Morgan Stanley analyst Praveen Choudhary takes a close look at which Macau casino operators are running the most efficient businesses. According to Choudhary, staff is the larest fixed cost for U.S.-listed Macau casino operators Las Vegas Sands Corp. LVS 1.94%, Melco Crown Entertainment Ltd (ADR) MPEL 3.18%, MGM Resorts International MGM 2.31% and Wynn Resorts, Limited WYNN 2.38%.

In fact, staff costs account for up to 70 percent of operating expenses for these four names.

“Thus, efficient management of staff cost could be a source of differentiation as far as margin and ROIC is concerned,” Choudhary explains.

Choudhary looked at a metric called employee efficiency, which is EBITDA divided by the total number of employees. He found that MGM has the highest efficiency of all the operators, followed by Sands, Wynn and Melco Crown.

Historically, Wynn had led the group in employee efficiency. However, the downturn in gaming revenue in Macau in the past two years has meant…

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