It was a one-two punch followed by a haymaker. In Macau, a handful of new Covid-19 infections at the end of September effectively ended hopes for a tourism revival during Golden Week.
The annual celebration (October 1-7), kicking off with Chinese National Day, commemorates the 1949 founding of the People’s Republic of China. In a normal year, Golden Week is prime time for tourism in Macau. And this year, following 18 months of unprecedented challenges due to Covid-19—as well as increasing crackdowns by Beijing—the city needed one in the win column.
But between October 1 and 3, fewer than 5,000 people had traveled to the casino hub. That’s down 91 percent from 2020—yes, the inaugural Covid year—and a trickle compared to the 980,000 people (140,000 per day) who visited Macau during Golden Week in 2019.
‘Zero Tolerance’
As recently as September 29, operators had high hopes for a robust Golden Week, even as the benchmark CSI 300 braced for its worst quarter since March of 2020—the very definition of “a new low.”
Those hopes were dashed with the new Covid-19 cluster. Due to Macau’s “zero-tolerance” policy—which responds to even minor outbreaks with snap lockdowns and mass testing—the border between Zhuhai and Macau, which was due to reopen for the holiday, remained closed. For casino operators, the boost was over before it began.
Ben Lee, co-founder and analyst with iGamiX, wrote in an email to GGB News, “It’s extremely quiet on the ground here. I did floor walks through a couple of Cotai casinos the past couple of days, and the number of players in each of them are no more than low- to mid-teens.”
Andy Wu Keng Kuong, chairman of the head of the Travel Industry Council of Macau, blamed the current situation on government mismanagement of the viral outbreak. “Over the past two years, the tourism industry has been worn out by the Covid-19 pandemic,” Wu told Macau Business. “We don’t know where the end of the last kilometer is.”
The latter statement referred to Macau Chief Executive Ho Iat Seng, who said the city was in the “last kilometer of the fight against Covid-19.”
The problem is, Ho said that in September 2020, more than a year ago.
Ending ‘The Great Shutdown’
Some business leaders say the mandatory quarantine between Macau, Mainland China and Hong Kong must be lifted before the economy can begin to rebound.
Lee agreed, saying, “We need to establish travel bubbles amongst the three jurisdictions, particularly for the vaccinated. Firstly, that will encourage more people to get vaccinated and secondly, it will increase inter-jurisdiction travel. Zhuhai City imposing a requirement for people to be vaccinated to enjoy quarantine-free ingress actually resulted in a surge in the Macau vaccination rate.”
According to JP Morgan analysts, the timing of the latest travel restrictions “could hardly be worse, as the industry was preparing for solid pent-up demand for the upcoming Golden Week. We think it’s a foregone conclusion that it will be an un-golden holiday.”
And a Credit Suisse team said if the zero-tolerance attitude goes unchanged, Macau’s current economic malaise “may well drag into 2022 or even 2023.”
“The challenge for the market still is with access from the immediate surrounding area,” said Brendan Bussman, analyst with Global Market Advisors. “While the Zhuhai border has been a solid conduit until the recent cases, the Hong Kong conduit remains a challenge until this returns to normal. The policies under the Great Shutdown continue to effect the market, and will for the foreseeable future under the current policy.”
When Golden Week ends, it’s likely to do so with a whimper, Bussmann indicated. “With the current zero-tolerance policy in play and new mass testing, it will be some time before Macau is back to its previous volume from 2019.
He added that any “new normal” cannot reasonably be based on “constant restrictions and challenges to cross borders, especially amongst those that are vaccinated.
“It’s time to figure out ways to reopen economies,” Bussmann said, “not just Macau to its immediate neighbors in Hong Kong, Zhuhai and the rest of the mainland, but around the globe.”
