Macau’s casinos suffered another devastating month in March as gaming revenue fell 79.7 percent. The market continues to reel from a virtual lockdown of the territory, which is trying to halt the spread of the Covid-19 contagion.
Figures released by the government’s Gaming Inspection & Coordination Bureau showed win from the 39 operating casinos at US$664 million for the month, following an even more straitened February, in which the industry was closed for two weeks by government order and revenue plunged to $386.5 million. That was a decline of more than 87 percent from the same month in 2019.
“With the government keeping limitations on individual and group visas into the market and transportation options remaining impaired we believe the Macau market could take five to seven months to start stabilizing and showing improvement,” Stifel Financial analyst Steven Wieczynski stated in a report to investors.
Including January’s 11.3 percent decline, the world’s largest casino market, which surpassed $36 billion in gaming win last year, is now down roughly 60 percent year-to-date.
The market is grappling with multiple restrictions, the most significant being the Chinese government’s halt to all visas for individual and group travel from the mainland, the industry’s largest feeder market by far. Mainland residents can visit Macau only if they have unexpired travel permits issued prior to the cancellations or by using other visas, such as those for business purposes.
Worse, mainland residents who visit Macau or Hong Kong now must undergo a 14-day quarantine on their return through Guangdong—all but ensuring that tourist levels will drop to near zero in the days ahead.
The Macau government for its part has imposed 14-day quarantines on visitors from Hong Kong and Taiwan, banned all travel from outside greater China, and is prohibiting entry to visitors from mainland China, Hong Kong and Taiwan who have traveled to other countries.
Combined, the effects have been chilling for the city’s tourism industry and for gaming, its largest business sector by far. Visitors from greater China accounted for more than 90 percent of last year’s 39.4 million visitors. Mainland visitors alone account for about two-thirds of monthly arrivals, with about half of those hailing from Guangdong and about 40 percent from the nine mainland cities of the surrounding region.
Those who can get to a casino are required to undergo temperature checks on arrival and departure, and wear masks within the properties. Restrictions on seating at gaming tables and distance requirements in the pits and slot machine areas also are in force.
The travel bans have all but shut down the junkets that manage and bankroll the market’s vaunted high-roller trade, and it’s reported that the casinos’ private VIP salons are generating meager volumes at best.
Morgan Stanley’s analysts recently revised their forecast for citywide gaming revenue downward from minus-16 percent for the year to minus-35 percent.
Like Wieczynski, they don’t expect returns to normalize before the fall.
“It’s still anybody’s guess as to what the next few months of gross gaming revenue will look like,” he said. “While the casinos are now operational, we believe visitation and play levels will remain depressed for the foreseeable future.”
With the virtual halt in international travel, the crisis has ravaged the city’s burgeoning conventions business as well. More than 500 events scheduled through March have been cancelled or postponed, and concerns are growing that at least half the 1,500 events planned for 2020 will be affected.
“The pausing of the MICE industry (meetings, incentives, conferences and exhibitions) has also created a knock-on effect not only on the tourism, hotels, dining and retail sectors, but also on advertising, financial, logistics as well as architectural industries,” said Alan Ho, managing director of the Macau Convention and Exhibition Association. “MICE events play an important role in driving forward-looking corporations, planning and developments in various industries, but all of those have stopped now.”
