Tourists and visitors poured into Macau during this month’s Golden Week holiday—more than 900,000 of them—but their huge numbers didn’t translate into a comparable boom for the city’s casinos.
The autumn version of the biannual holiday, which encompasses China’s National Day on October 1 and this year ran through October 7, saw visitation eclipse 2018’s by more than 13 percent, according to preliminary figures released by the Macau Government Tourism Office.
As usual, most of the 744,000 visitors—more than 80 percent of them—came from the Chinese mainland, an increase of nearly 11 percent over last year.
“While hotel bookings were solid, the quality of the customers has been lower (i.e., lower spend per head) this year,” noted Sanford Bernstein analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu.
Historically, the period has been a windfall on casino floors. But in line with headwinds that have prevailed through most of 2019—softness in the larger Chinese economy and the trade war with the U.S. among them𑁋high rollers were scarce.
The uncertainties appear to have fomented skittishness within the partnership between junket operators and China’s shadow-banking community, the lenders that enable high-stakes gamblers to evade the country’s strict currency restrictions. It didn’t help when Beijing called out a leading junket this summer for purported illegalities, and Australian authorities launched an investigation into junket activities at Crown Resorts.
JP Morgan analysts D.S. Kim, Jeremy An and Derek Choi summed it up in a client note: “Golden Week demand was unexciting, as well as expected.”
Their checks for the period indicated average daily gaming revenue of about MOP1.15 billion (US$142.3 million) per day, “implying a 12 percent decline from last year’s approximately MOP1.3 billion per day,” they said.
The reason, according to estimates from brokerage Nomura, is that daily VIP volume was tracking through most of the week at 22 percent to 24 percent below last year, negating an estimated 8 percent to 10 percent increase in revenue on the mass-market side.
Sanford Bernstein concurred. “As we have expected, based on conversations with industry participants, higher-end play was tepid during Golden Week, and will likely remain so for the rest of October.”
