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Macau Casino Traffic Surges: Is the Worst Over for the Industry?
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Traffic has been a major cause of concern for the gaming industry since the coronavirus pandemic hit last year. However, the industry is gradually coming out of the woods. Reopening of the economy and enhanced vaccination drive have been reinstating investor confidence. The industry players have been benefiting from robust demand for sports betting.
Casino visitation in Macau has increased considerably in the first week of September. Lei Wai Nong, the city’s secretary for economy and finance said that Macau registered 24,000 visitations on Tuesday, compared with average daily visitation of 21,000 in the first half of 2020. Traffic was down in August due to the coronavirus related alert.
Lei Wai Nong also informed that the Macau government will “definitely” adjust its full-year estimate for casino gross gaming revenue (GGR) taking into account the recent events. The Macau government is optimistic regarding improvement in Macau’s GGR in the coming two months.
Improvement in gaming revenues from Macau is likely to benefit companies like MGM Resorts International (MGM - Free Report) , Melco Resorts & Entertainment Limited (MLCO - Free Report) , Wynn Resorts, Limited (WYNN - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) , which generate a major portion of their revenues from the region. In the past year, the Zacks Gaming industry has increased 22.4% compared with the S&P 500’s growth of 39.4%.
Image Source: Zacks Investment Research
What’s Ahead For the Industry?
Although visitation is likely to continue improving in the coming months, it is expected to take time to attain the pre-pandemic levels. Despite the early September gain, the average is still 66% below the same period in 2019. Per, Fitch Ratings, Macau’s GGR in 2021 will be “nearly 65 percent below 2019 levels.” In 2022, revenues will recover to 35% below 2019, while full recovery is anticipated by 2024.
Earlier, Macau Gaming Inspection and Coordination Bureau (“DICJ”) had increased gaming inspectors by more than double. The number of inspectors increased to 459 from 192. In recent years, Macau has heightened scrutiny of casinos to clampdown on corruption in China. This compelled Macau officials to impose restrictions on high rollers to stop billions of dollars from being siphoned off illegally from mainland China to Macau.
Casino visitations in 2020 declined sharply primarily due to lockdowns and other coronavirus-related restrictions. This persuaded the casino operators to focus on online betting. With development in the latest online gaming technology driving revenues, several companies have been investing heavily in digital initiatives to improve reliability and customer services.
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Macau Casino Traffic Surges: Is the Worst Over for the Industry?
Traffic has been a major cause of concern for the gaming industry since the coronavirus pandemic hit last year. However, the industry is gradually coming out of the woods. Reopening of the economy and enhanced vaccination drive have been reinstating investor confidence. The industry players have been benefiting from robust demand for sports betting.
Casino visitation in Macau has increased considerably in the first week of September. Lei Wai Nong, the city’s secretary for economy and finance said that Macau registered 24,000 visitations on Tuesday, compared with average daily visitation of 21,000 in the first half of 2020. Traffic was down in August due to the coronavirus related alert.
Lei Wai Nong also informed that the Macau government will “definitely” adjust its full-year estimate for casino gross gaming revenue (GGR) taking into account the recent events. The Macau government is optimistic regarding improvement in Macau’s GGR in the coming two months.
Per brokerages — JP Morgan Securities (Asia Pacific) Ltd and Sanford C. Bernstein Ltd, Macau’s operators recorded GGR of MOP$250 million (US$31.2 million) per day from Sep 1 to Sep 5. In August, the average daily rate was MOP$143 million (US$18 million). The uptrend is likely to continue during the Autumn Golden Week — a holiday period in China.
Improvement in gaming revenues from Macau is likely to benefit companies like MGM Resorts International (MGM - Free Report) , Melco Resorts & Entertainment Limited (MLCO - Free Report) , Wynn Resorts, Limited (WYNN - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) , which generate a major portion of their revenues from the region. In the past year, the Zacks Gaming industry has increased 22.4% compared with the S&P 500’s growth of 39.4%.
Image Source: Zacks Investment Research
What’s Ahead For the Industry?
Although visitation is likely to continue improving in the coming months, it is expected to take time to attain the pre-pandemic levels. Despite the early September gain, the average is still 66% below the same period in 2019. Per, Fitch Ratings, Macau’s GGR in 2021 will be “nearly 65 percent below 2019 levels.” In 2022, revenues will recover to 35% below 2019, while full recovery is anticipated by 2024.
Earlier, Macau Gaming Inspection and Coordination Bureau (“DICJ”) had increased gaming inspectors by more than double. The number of inspectors increased to 459 from 192. In recent years, Macau has heightened scrutiny of casinos to clampdown on corruption in China. This compelled Macau officials to impose restrictions on high rollers to stop billions of dollars from being siphoned off illegally from mainland China to Macau.
Casino visitations in 2020 declined sharply primarily due to lockdowns and other coronavirus-related restrictions. This persuaded the casino operators to focus on online betting. With development in the latest online gaming technology driving revenues, several companies have been investing heavily in digital initiatives to improve reliability and customer services.