Sizing Up Pandemic’s Massive Toll on Macau

The Macau government expects the year to end with total visitation of around 5 million. That’s down more than 85 percent from 2019. Not surprisingly, most of the visits predated the Covid-19 crisis.

Sizing Up Pandemic’s Massive Toll on Macau

Visitation to Macau in 2020 is expected to be down by more than 85 percent from 2019, the territory’s tourism chief said.

Maria Helena de Senna Fernandes, director of the Macao Government Tourism Office (MGTO), said the total likely will top out at around 5 million, roughly 12 percent of last year’s 40 million, and most of it occurred in January, prior to the full impacts of the pandemic.

“January was a very good month with 3 million visitors,” she said, “but the remaining 11 months didn’t even match that amount.”

The MGTO has organized a series of year-end events, including a food festival and a “Winter Carnival,” in hopes of boosting visits during the Christmas and New Year’s holidays, which are not popular travel times for mainland Chinese.

The agency also recently sponsored a tour by mainland media groups “to pass the image that Macau is a safe place and has a lot to offer,” Fernandes said.

Meanwhile, the city has canceled an annual New Year’s Eve fireworks show which typically attracts around 30,000 spectators in response to an assessment by the Macao Health Bureau that the gathering would pose a pandemic risk.

Fernandes said she doesn’t believe the decision will have a “significant impact” on visitation, which, through mid-December, has been averaging around 18,000 to 20,000 people a day, according to her office.

Gaming revenue over the same period has been tracking at around MOP$200 million a day (US$25 million), according to checks by analysts with brokerage Sanford Bernstein. It works out to a decline of 11 percent from November’s average and is down around 72 percent from same period last year.

While the central government has restored individual tourist travel to the casino hub, the Bernstein group doesn’t expect the numbers to begin to recover fully until travel with Hong Kong, which contributes upwards of 15 percent of the market’s annual win, is permitted to resume.

As it stands, Hong Kong is battling a new surge of Covid infections, and Macau authorities say they won’t reopen the borders until its neighboring city is able to report no locally transmitted cases of the virus for 14 consecutive days.

Fitch Ratings expects Macau’s economy to contract by 50 percent in 2020, with 2021 delivering a robust recovery fed by a return to growth in mainland China.

A new report from Andrew Fennell, a senior director with the debt ratings agency, is looking for China’s economy to grow by 8 percent next year, well over 2020’s 2.3 percent. “This should have positive spillovers for the neighboring economies of Hong Kong, Macau and Taiwan, which are dependent on the mainland market for exports and tourism,” he wrote.

For Macau, the impacts could result in economic growth in the range of 35 percent, the report states, which should shrink the government’s budget deficit from 14 percent of gross domestic product this year to 3.4 percent in 2021.

“Meanwhile, the territory’s large fiscal reserve, which we estimate at 275 percent of GDP, provides substantial headroom should the tourism shock prove more prolonged than we currently expect,” Fennell said.

The territory held MOP187.6 billion (US$23.50 billion) at the end of October in foreign exchange reserves, with financial reserves of almost MOP600 billion ($75.18 billion).

The government is looking to a recovering casino market to generate MOP130 billion in gaming revenues in 2021 ($16.29 billion). That’s only 55 percent of 2019’s pre-pandemic total, but it should prove good for a projected MOP45.5 billion tax haul.