Analysts say Macau gaming revenue is likely to fall more than 95 percent this month as the shutdown of the territory’s casinos in response to the potentially lethal coronavirus heads into its second week.
The government ordered the city’s 41 casinos closed starting midnight February 5, after it was reported that two gaming employees had contracted the virus, a SARS-like respiratory disease that has surpassed the 2002-03 SARS death toll. Coronavirus has claimed more than 1,100 lives in China, where the disease emerged in December. As of late last week, more than 42,000 of the more than 43,000 cases confirmed worldwide were in China.
Macau’s two main industries, gaming and tourism, depend on China. But visitation from the mainland is at a virtual standstill after the central government halted group and individual travel to the territory.
The contagion wrought havoc with the Lunar New Year celebrations that commenced at the end of January, traditionally the busiest travel period in China and a boom period for the casinos. Visits gradually fell over the weeklong holiday from 36,000 a day to 8,000. Last year, visitation to the city topped 39 million, more than 27 million from China. On average, the city hosted more than 107,000 tourists a day. On Saturday, February 8, local authorities counted a mere 2,800 visitors, the lowest single-day total since recordkeeping began.
Since January 27, the total number of visitors to the territory is down more than 90 percent compared to the same period last year. To date, around 3,000 hotel rooms in eight hotels and 15 guesthouses have suspended operations.
“Forecasts for the near term are largely guesses at this time, with the biggest variables being when casinos reopen, and even more importantly, when travel restrictions from China will be lifted,” said a team of four analysts with brokerage Sanford Bernstein.
The casinos, which directly employ 20 percent of the city’s labor force and generate 85 percent of government tax revenue, the closure is reported to be costing the industry around US$100 million a day.
“This is a historical moment because this is the first time the entire casino industry has closed its doors for more than 24 hours,” Carlos Lobo, a local attorney formerly employed by the government’s Gaming Inspection and Coordination Bureau, told the Los Angeles Times. “We don’t know what’s coming. So much of life here is connected to gaming.”
“For Macau, the near term looks bleak,” the analysts at Sanford Bernstein reported, “but we see a solid recovery in place in (the second half) followed by a strong 2021.”
With more than 160 million Chinese citizens traveling overseas every year, accounting for more than 30 percent of travel spending worldwide, hotels, airlines and retailers everywhere are feeling the pinch.
As the Sanford Bernstein analysts noted, “A growing number of countries have been implementing travel restrictions on entrants coming from China and airlines are significantly reducing or eliminating scheduled flights.”
The impact has been especially severe in East Asia, where many countries have been developing resort-scale casino industries similarly dependent on Chinese gamblers and where the largest proportion of infections outside China have occurred, including one fatality in the Philippines and one in Hong Kong.
As of last week, Macau had reported 10 confirmed cases of the virus, including three local residents with no history of recent travel to China’s Hubei province, the epicenter of the outbreak. Local authorities said last week that 31 cases involving patients diagnosed outside Macau were individuals with a record of either working in or traveling to the city, including a Malaysian man who works for the City of Dreams casino and was diagnosed in Malaysia.
Japan has confirmed the highest total of international cases to date, 161, followed by Singapore with 45, Hong Kong with 42, Thailand with 33 and South Korea with 28. Forty-three cases had been confirmed across Western Europe, Scandinavia and Russia, 13 in the U.S. and seven in Canada.
In Singapore, which is home to two of the largest gaming megaresorts in the world and where travelers from China comprise 20 percent of visitation, the largest share of any country, officials are bracing for a 25 to 30 percent drop in tourist arrivals and spending this year.
The city-state is losing about 18,000 to 20,000 tourists a day, and the figures could fall further if the virus is contained soon, said Keith Tan, the head of the Singapore Tourism Board, speaking with Bloomberg TV.
“The main cry that I’m hearing is ‘help’ right now from the entire tourism industry,” he said. “There’s lots of anecdotal evidence of business drying up, but that’s not surprising given how much China contributes to our visitor arrivals.”
The Tourism Board is planning to form a Tourism Recovery Action Taskforce, comprising tourism leaders from public and private sectors to help with recovery efforts, similar to actions taken during SARS, when tourist arrivals declined by 18 percent to 19 percent.
In Macau, casino operators have pledged some MOP90 million to date (US$11.2 million) to fight the virus in China and aid recovery efforts.
Meanwhile, a worker at Genting’s Resorts World Sentosa in Singapore has been confirmed as infected with the coronavirus. According to Singapore’s Ministry of Health, the total number of coronavirus cases detected in the city-state as of last Tuesday stood at 47.
Management at Resorts World Sentosa said some workers who had been in contact with the employee have been instructed to take a 14-day leave of absence.
“Deep cleaning, thorough disinfection and sanitization have been carried out at all areas and touchpoints where the employee had come into contact with,” the resort’s management told news agency CNA.
On Monday, February 17, with no new cases of the virus reported since February 4, Secretary for Economy and Finance Lei Wai-nong gave casinos 30 days to resume operations. However, in an ongoing safety measure, casino visitors must wear masks and have their temperature checked at the entrance. According to the South China Morning Post, “other entertainment premises” such as pubs, karaoke bars, cinemas and steam rooms must remain closed for now.
