Visitation to Macau during Golden Week hit a new high for the annual holiday, but gaming revenue is estimated to have fallen sharply against the same period last year.
Official data show total visitation was up 6 percent year on year to 901,000 during the holiday, which commenced on October 1, China’s National Day, and ran through October 6. Gaming revenue from the same period may have fallen by 33 percent, according to analysis by Wells Fargo, while investment brokerage Sterne Agee estimated a 30 percent decline.
The drop follows four straight months of year-on-year declines driven by steep decreases in VIP play out of China and softer growth in the mass market.
Both are blamed on a combination of factors: a crackdown on corruption by the central government, slowing economic growth on the mainland, which is impacting credit liquidity for junkets, stricter enforcement of certain visa rules for outbound travel from the mainland, and greater scrutiny of cash transactions in Macau to conform with China’s currency controls.
Student protests in Hong Kong may also have contributed. “We believe Hong Kong’s Occupy Central protests negatively impacted quality of play early in October,” Sterne Agee said. “Many mainlanders delayed or cancelled trips to Hong Kong in the wake of last week’s protests. Mainlanders often travel to Macau during their visit or holiday in Hong Kong.”
Analysts are also revising their October revenue projections downward, some by as much 23 percent.
In the third quarter, VIP revenue was down 19 percent year on year and fell below 60 percent of total revenue (56 percent) for the first time since the market opened to competition a decade ago.
Analyst Grant Govertsen of Union Gaming Research Macau said, “As the combined high-margin business of mass market tables and slots continues to grow (15% y/y growth this quarter), which we think should be largely sustainable over the coming years, the revenue mix shift towards mass market should continue. However, when the VIP market recovers, we would expect the mix shift to return VIP to a 60%+ share.”
In all, revenue was down 7 percent year on year for the three months ended September 30 to MOP82.9 billion (US$10.4 billion) Mass market table revenue was up 16 percent to MOP32.2 billion ($4.1 billion). Slot revenue was up 5 percent to MOP3.7 billion ($500 million).
