On January 8, cross-border travel to Macau finally reopened after lengthy, intermittent and unpredictable Covid-19 closures. The resulting influx of tourism contributed to a spike in gross gaming revenues (GGR) for January, with casinos posting their highest monthly totals in three years, according to official data.
Macau’s Gaming Inspection and Coordination Bureau (DICJ) posted a total GGR of MOP$11.58 billion (US$1.4 billion) for January. That’s the best monthly return since January 2020 and beat analyst expectations of MOP$8 billion to MOP$9 billion.
Thanks to open borders ahead of the Chinese New Year (CNY) holiday, the industry’s recovery is improving more quickly than expected, per analysts cited by Inside Asian Gaming. JP Morgan’s DS Kim said the pace of recovery was “unthinkable” until recently.
“At this level, all operators … are already and comfortably printing positive free cash flows (EBITDA plus interest costs plus maintenance capex), an important milestone that we’ll be able to confirm from 1Q results later,” wrote Kim. “This, if true, would be two to three quarters earlier than what the market had expected/modeled and thus very positive fundamentally.
“One thing seems very clear to us: the Street estimates will have to go up substantially for 1Q23 and FY23.”
John DeCree of CBRE Equity Research added that mass-market play has bounced back beyond the overall 52 percent improvement rate, “perhaps in the 70 percent range.
“This run-rate level of mass market GGR would put most operators on the path to meaningful EBITDA contribution and even positive cash flow in 1Q23—ahead of expectations,” DeCree wrote.
“This trend is a signal of pent-up demand and a premium-led recovery, with spend per visitor tracking higher—similar to the recovery experienced in the U.S. and other gaming markets that ultimately led to gaming volumes exceeding pre-pandemic levels.”
The drop-off in VIP business makes it “too early to say if GGR could exceed 2019 levels any time soon,” he added. However, “the cadence of a mass-market recovery is nonetheless encouraging and points to a sharper recovery in profitability than previously expected.”
Credit Suisse analysts Kenneth Fong and Sardonna Fong were more cautious, writing, “The strong Macau performance so far is the result of several temporary drivers, such as limited travel option for Mainland Chinese, with only 10 percent of 2019 international flight capacity.”
According to Asia Gaming Brief, the Chinese gaming hub welcomed more than 451,000 visitors during Golden Week, part of the Lunar New Year holiday, from January 21-27. That breaks down to more than 64,400 visitors per day, for an increase of almost 300 percent over the same period in 2022. By contrast, about 2.21 million people visited Macau during Golden Week in 2019.
During this year’s holiday, hotel occupancy averaged 85.7 percent, up 22.4 percentage points compared to the same period last year. And the average room rate was MOP$1,575 (US$195), up nearly 50 percent over CNY 2022.
The Macau Government Tourism Office (MGTO) said, “The satisfactory tourism figures over the Spring Festival Golden Week mirrors visitors’ high intentions to travel to Macau during Chinese New Year and opt for a first-hand experience of the city’s glamor in ‘tourism-plus.’ The bustling scene reflects a positive outlook for the tourism and related industries.”
Macau’s six gaming concessionaires and the MGTO collaborated on a number of New Year activities to mark the celebration, including parades and fireworks displays.
