A Tough Year for Macau, But Reasons for Optimism

Last year, Macau casinos generated $5.3 billion in gaming revenues, down more than half from 2021, for the lowest total in 18 years. But the ongoing relaxation of pandemic restrictions could mean a happier new year for casino concessionaires.

A Tough Year for Macau, But Reasons for Optimism

In 2022, Macau posted gross gaming revenues (GGR) of MOP$42.2 billion (US$5.3 billion), a decline of 51.4 percent from 2021 and the lowest annual total since 2004.

The yearly total was announced on New Year’s Day by the city’s Gaming Inspection and Coordination Bureau (DICJ). The tally included GGR of MOP$3.48 billion (US$435 million) for December, down 56.3 percent from the prior-year period but higher than November’s GGR total of MOP$3.0 billion (US$373 million), as reported by CDC Gaming Reports.

But there may be reason for hope in the new year. As of January 8, Macau officially ended quarantine restrictions for all incoming visitors. According to Inside Asian Gaming, travelers from Mainland China must no longer take nucleic acid tests (NATs) to enter, and people of all nationalities may enter without quarantine. Overseas visitors, however, still must take the NAT test shortly before arrival.

As IAG noted, border controls between the mainland and the special administrative region (SAR) have “effectively returned to the pre-pandemic situation.”

Macau is looking for a rebound in travel this year, and hopes to welcome up to four times the number of daily visitors who came in 2022—from 10,000 a day to 40,000, said Maria Helena de Senna Fernandes, director of Macau Government Tourism Office (MGTO).

That’s “the target that we have set for ourselves for 2023,” she said, and added that the MGTO will promote Macau as a destination in Thailand, Japan, South Korea and elsewhere. Hoteliers will cooperate with discounted rates.

It’s all part of a wider easing of Covid-19 restrictions to the gaming hub, though the long-awaited reopening has been accompanied by a spike in infections. But Macau Health Bureau Director Alvis Lo downplayed the viral surge, saying, “Sixty percent to 70 percent of the population in Macau has already been infected, and according to health information they will not be re-infected within three to six months after infection.”

In the aftermath of January 8, he said, “The transition period will end … and Covid will become an endemic disease in Macau.”

The gaming industry still faces big challenges as it tries to return to normal. That includes a drop in available employees, with up to half unable to report to work.

Senna Fernandes, asked about an increase in layoffs since the pandemic, said the return of tourism will also mean the return of broad-based employment. “More service people will be needed. For those who are in business, they are definitely very much aware of what is needed and they will also find the manpower.”

Meanwhile, a Reuters report called 2022 “the worst annual performance on record” for Macau casinos, and said operators may have a tough time fulfilling commitments to invest $15 billion in their properties citywide. Ninety percent of the investments must be unrelated to gaming, with non-gaming attractions a requirement of the city’s new, shorter 10-year gaming concessions, which began on January 1.

Non-gaming revenues accounted for only 5 percent of overall gaming revenues before the pandemic, and must grow an additional 25 percent in the next decade. Ben Lee, founder of Macau gaming consultancy IGamiX, told Reuters that history is not on their side. “For the past 20 years, none of the operators have managed to establish any significant progress in non-gaming,” said Lee.

Operators also must pay new fees of MOP750 (US$93.30) per square meter (10.8 square feet), encompassing both their casinos and gaming equipment, and pay that rate for the next three years. In the fourth year, GGRAsia reports, the “rent” will increase to MOP2,500 per square meter. For the balance of the 10-year term, the fee will be updated using the preceding year’s fees as the base, adjusted according to the average consumer price index.

The fee will be paid as an annual amount in March each year.