Officials say quality of life has been compromised
As Macau marked its eighth straight month of declining casino revenues, Secretary for Social Affairs and Culture Alexis Tam Chon Weng says the city may limit the number of incoming tourists. According to GGRAsia, Tam blames swarming tourists for adversely affecting the city and the quality of life of its residents.
Some 31.5 million people visited Macau last year; Mainland Chinese accounted for over two-thirds of that number. A cap on tourists could further challenge the city’s gaming industry, which hopes to court mass-market players to compensate for the loss of high rollers.
During last month’s Lunar New Year celebration, police added extra patrols to ensure public order. According to the Macau Daily Times, more than 1.72 million people crossed Macau’s border checkpoints between February 18 and 22, and some waited hours to make the passage. But that kind of popularity has become a burden for locals, said Tam. “We have to make a scientific decision. The core principle is that our residents’ quality of life should not be worsened.”
According to official data, visitors to Macau spent MOP61.8 billion (US$7.7 billion) last year, up 3.7 percent from 2013. If the volume of mainstream visitors is curtailed, it could cause further contraction of the economy, which is reliant on casinos for up to 80 percent of revenues.
Since June 2014, the Chinese government’s crackdown on corruption and money laundering in Macau has caused many VIP players to leave the city. Macau has instituted tighter conditions for credit-issuing junkets and reduced the number of transit visas for high rollers. As a result, the city’s 30-plus casinos have experienced monthly year-on-year revenue declines of up to 30 percent.
There are no signs the slide will end soon; even during the Lunar New Year, spending among tourists may prove disappointing. Analysts have told Bloomberg News that gaming revenues may fall 53.5 percent for the month, worse than the 40 percent drop forecast before the holiday.
The plan to limit tourism had an immediate, discouraging effect on investors. Wynn Macau dropped 3.7 percent to HK$21.95 on the news. Galaxy Entertainment Group Ltd. and Sands China Ltd. each dropped 2.7 percent, SJM Holdings Ltd. declined 2.3 percent. MGM China Holdings dropped 2 percent and Melco Crown Entertainment fell 1.7 percent.
“We’re still cautious on gaming stocks,” said Daphne Roth, head of Asian equity research at ABN Amro Private Banking. “The Chinese government is determined to pursue its anti-corruption drive and that’s negative on the casino stocks.”
“We believe the situation is likely to deteriorate in the coming months,” agreed Credit Suisse analyst Kenneth Fong. “On the VIP side, with more junkets shutting down, (with) business post-Chinese New Year and working capital in the system shrinking, revenue may see another leg down.”
