Transportation disruptions and growing concerns over safety stemming from the unrest in Hong Kong are taking a toll on the casinos in neighboring Macau, according to reports from the Chinese gaming hub.
Hong Kong, a city of more than 7 million and a major Asian financial center, has suffered a wave of sometimes violent protests that started in June when demonstrators began pouring into the streets to oppose a bill, which the local government has since shelved, permitting Hong Kong residents facing trials to be extradited to courts in mainland China.
Protestors have stormed the offices of the city government, the liaison office of the Chinese government and recently forced the airport to close. Clashes with police firing tear gas have become a daily occurrence, and it’s reported that units of the Chinese military have been massing at the border.
Australia and the United States are among the nations that have issued Hong Kong travel advisories.
“When you have hundreds of flights canceled out of Hong Kong and some reluctance to travel, I do think that’s impacting the premium end of the business,” said Matt Maddox, chief executive of Wynn Resorts, the U.S. parent company of Macau casino operator Wynn Macau.
Macau is linked to Hong Kong, roughly 40 miles to the north, and its international airport by ferry service and, more recently, by a bridge that also connects to the mainland city of Zhuhai.
The disruption comes at a particularly bad time for the casino market, which is grappling with slowing economic growth in its principal feeder markets on the mainland and escalating trade tensions between Beijing and Washington.
July’s 3.5 percent drop in gaming revenues was sharper than analysts had anticipated, and industry executives and analysts say the protests are likely to affect revenues going into the fall in what is typically a busy period for the market.
At Hong Kong’s Shun Tak Center, where travelers board ferries from the airport for Macau, tour groups said the protests had caused their business to drop 30 percent or more from previous months.
The Macau Government Tourism Office is urging tour groups to bypass Hong Kong and make Macau and Zhuhai the first stops of their itineraries.
Analysts with Macquarie Capital, meanwhile, believe a challenging business climate on the mainland won’t be working to ease the situation any time soon.
“We focus on mainland private enterprises whose leaders, we believe, are today’s VIPs and premium mass,” the brokerage said in a note to investors. “As we look at private business conditions, the outlook is still bleak, with earnings slowing, defaults rising and registered businesses declining.”
The firm believes VIP betting volumes could shrink by 15 percent this year, partially offset by an 11 percent increase in mass market wagering, resulting in gaming revenue for all of 2019 roughly flat with 2018.
