The speed with which Macau’s short-term prospects have turned around since the start of the year is nothing short of staggering.
As recently as mid-December, popular opinion was that 2023 loomed as yet another difficult year for Macau’s embattled concessionaires, with China’s strict zero-COVID policy showing no signs of easing anytime soon. Certainly nobody saw a Beijing backflip coming, yet just days after the start of the New Year it was announced that China would remove almost all COVID-19 restrictions from 8 January, including all border restrictions between the mainland, Macau and Hong Kong and all except a negative COVID test requirement for foreign arrivals.
Fast forward just a few short weeks, and the Hong Kong ferries that have sat in dry dock for three years are running again, and Macau’s tourist streets – eerily empty for most of the past three years – are bustling like the good old days. More importantly, there is action aplenty in Macau’s casinos, with the pace of recovery surprising even the most bearish of industry analysts.
Within a day of reopening, JP Morgan’s DS Kim issued a note stating that his earlier estimate of Macau GGR recovering to 35% of 2019 levels appeared to be “a bit too conservative” given the earlier-than-expected return of Hong Kong gamblers. The Macao Government Tourism Office then issued a prediction that daily visitation into Macau could reach as high as 50,000 during Chinese New Year, only to see visitor arrivals exceed that number on the first full weekend after reopening, with more than 153,000 arrivals between Friday 13 and Sunday 15 January. Golden Week visitor numbers reached as high as 90,000 in a single day.
So what does this mean for Macau GGR?
Only months ago, we laughed when Macau Chief Executive Ho Iat-seng forecast gaming revenues of MOP$130 billion (US$16 billion) in 2023. This was exactly the same number the government had forecast in each of the two previous years as well, only to see 2021 GGR limp to MOP$86.9 billion (US$10.8 billion) and 2022 GGR to a pitiful (for Macau) total of MOP$42.2 billion (US$5.3 billion). But like JP Morgan’s earlier estimates, the Chief Executive’s forecast may even prove to be too conservative.
The sheer speed of Macau’s recovery these past few weeks gives further credence to the theory of pent-up demand, suggesting huge upside potential in the months ahead given that much of mainland China is still dealing with the effects of the country’s massive COVID outbreak. Their appetite to travel will only increase once those concerns become a thing of the past.
And word on the street has it that Macau’s busy gaming floors are no illusion: not only are players back but they’re betting big too, raising questions about fears that bringing cash into Macau might be far more difficult in 2023 than it was prior to the mainland’s recent cross-border gambling crackdown.
If this is true, then hopes that Macau might get back to the revenues – or at least EBITDA – that we saw back in 2019 or even at the SAR’s peak in 2013, might not be so far-fetched after all.