Macau gaming revenues declined 94.5 percent in August, the fifth consecutive month of year-on-year shortfalls in excess of 90 percent.
Win for the month totaled MOP 1.33 billion (US$167 million), according to results tallied by the government’s Gaming Inspection and Coordination Bureau.
It brings the total through the first eight months to US$4.55 billion, down by more than 81 percent from the same period last year.
Analysts aren’t unduly concerned, however.
“We fully believe investors understand what the Macau market is up against at this point and remain prepared for an uncertain near-term time frame,” said Stifel Financial’s Steven Wieczynski.
Historically, Macau’s casinos generate the largest combined gaming revenues in the world by far. In 2019, a relatively soft year, they totaled $36.6 billion. But that changed, and dramatically so, with the advent of Covid-19, which was first identified in mainland China in December and prompted authorities on the mainland and in Macau to shut down cross-border tourism and impose mandatory quarantines and other restrictions which have had the combined effect of cutting the market off from its principal supply of gamblers.
Visitation has begun to recover in recent weeks, albeit slightly, as the two governments gradually rescind the toughest of the restrictions, including the quarantines. Averages have held at around 10,000 a day. That’s only about 10 percent of pre-pandemic levels, but it’s a huge improvement over the trickle of a couple a hundred visitors a day during the worst of the crisis earlier this year.
The next big step is for mainland authorities to fully restore visas for tourist travel, a process reintroduced in July in Macau’s neighboring city of Zhuhai and extended to the rest of Zhuhai’s Guangdong province last month. China accounts for around 70 percent of visitors to Macau, and the tourist visas, issued as part of a program known as the Individual Visit Scheme, generate almost half of them. With the IVS slated for restoration across all of China on September 23, casino operators are looking for revenues to begin the long climb back to pre-pandemic levels commencing with the historically lucrative Golden Week holiday starting October 1.
Concerns remain in some quarters that China will keep a tight rein on visitation, but as Macquarie Securities analyst Edward Engel noted, the Macau government has been “aggressively” promoting visitation in recent weeks.
Earlier this month, the Macau authorities announced a partnership with a China e-commerce giants Tencent and Alibaba on a package of cash incentives to stimulate visitation from the mainland.
The program provides discounted hotel rooms and discounts on airfare in conjunction with Air Macau for winners of draw that can be entered on the Macao Government Tourism Office site on Tencent’s WeChat social media platform and via Alibaba’s travel services platform, Fliggy.
The government said it had chosen Tencent and Alibaba for their effectiveness in promoting spending on domestic tourism within China, especially in areas such as hotel stays, restaurants and retail.
It’s an acknowledgement also of the fact that relatively unfettered access to Macau will be limited, at least in the near term, to mainland China. Travelers from Hong Kong, another key market, and Taiwan must present a certificate verifying they’re Covid-free or submit to a 14-day quarantine. All travel to the territory from outside greater China is currently prohibited except for Macau ID holders.
“We do not believe Macau would purposely overreach beyond mainland policymakers’ comfort levels,” Engel said. “Rather, we believe mainland regulators are more tolerant of mass visitation than investors acknowledge.”
In line with Engel’s observation, Morgan Stanley’s Praveen Choudhary pointed to the positive increase in average visitation, noting also that while hotel occupancy is still low, gaming spend per visitor is returning to more normal levels.
“Here onwards we think visitation and (gaming revenue) will move together,” he said.
