Macau recorded fewer than 1,000 visitors over the first three days of the Easter holiday, as border restrictions and quarantines aimed at curbing the spread of Covid-19 leave the world’s largest casino market largely isolated.
The decline compared to last year was more than 99 percent, according to figures released by the local Public Security Police, which show just 260 people entered the city on Good Friday, 280 that Saturday and 270 on Easter Sunday.
The numbers came close to the lowest single-day visitation on record, when just 210 people entered on the previous Saturday, April 4. The highest number of entrants on any single day this month has been 360.
By comparison, more than 550,000 people visited over the 2019 holiday.
While visitation is nominally open for residents of mainland China, Hong Kong and Taiwan, those from Hong Kong and Taiwan are required by the Macau government to undergo mandatory quarantine for 14 days in one of four designated hotels. In addition, all public transportation from Hong Kong, is suspended.
An even bigger factor is an order recently imposed by the government of the neighboring mainland province of Guangdong, the city’s largest single feeder market, requiring 14-day quarantines for all arrivals from Macau and Hong Kong, including its own citizens, who are required to re-enter the country through the province.
The effect, combined with a halt imposed by the Chinese government on outbound visas for individual and group travel, has been to cut off Macau from the source of 90 percent of its annual visitation.
The impact on gaming revenue has been devastating. Win, which topped 292 billion patacas in 2019 (US$36 billion), was down year on year by 88 percent in February, when the 39 casinos were closed for two weeks, and down by 80 percent in March.
What revenue there is believed to be coming mostly from VIP play as some high rollers have opted to stay in the city rather than undergo the Guangdong quarantine.
And April could be worse. Assuming current travel restrictions are still in place the decline could be upwards of 95 percent, according to the latest forecast from brokerage Sanford Bernstein.
With some loosening of travel restrictions, analysts believe revenue could pick up in May, but more likely it won’t come before June, while the chance of any strong near-term recovery remains “unlikely,” as Bernstein put it.
It’s possible as well that it could take years for the market to return to 2019 levels, according to the latest from Instinet, the equity trading arm of global financial services group Nomura.
Assuming Guangdong removes the quarantine and China resumes issuing visas for individual travel, at least for some provinces, Instinet’s analysts expect second-quarter revenue to decline by around 80 percent year on year, improving to minus-65 percent in Q3 and to minus-60 percent in Q4. This suggests a likely return next year to 60 percent of 2019 levels and to 90 percent by 2022, they said.
“There will likely be a recovery in 2020, but slow,” they stated in a recent note to investors. “Macau’s Finance Secretary Lei commented that the government envisioned ‘normalcy’ at the borders soon, which we think may be right in six to 12 months, but it is too optimistic for 2020.”
A new survey suggests residents of China are postponing plans to travel to Macau travel by as much as 12 months. A poll of 2,000 residents of the country’s largest cities commissioned by investment bank Morgan Stanley indicated that 43 percent would not be traveling to the casino hub any time soon, and only 7 percent said they would attempt to visit in the month ahead, normally one of the country’s busiest travel seasons because of the weeklong May Day holiday.
In related news, the Macau government has announced MOP13.6 billion (US$1.7 billion) in stimulus funding for the coronavirus-wracked territory, but casino operators won’t be seeing any of it.
The rescue package, designed to “sustain employment and stimulate local demand,” will be distributed mostly in the form of MOP10 billion ($1.25 billion) in subsidies to qualifying small and medium-sized businesses and their employees.
“Gaming operators and others large-scale businesses have accumulated certain profits in the past, and they should have the conditions to maintain their operations and sustain employment,” said Secretary for Finance and Economy Lei Wai Nong. “The government is tilted in favor of employees, residents and SMEs at this time, and we hope operators could understand.”
