Over the past few months, much of East Asia has emerged from the throes of the pandemic. Countries outside of China have lifted mandatory quarantines for inbound travelers, most have ceased requiring COVID tests upon arrival and have more or less adopted living with COVID health policies. In response, international tourism has resumed and jurisdictions such as Singapore have seen hotel occupancy levels rise, and room rates return to pre-pandemic levels.The People’s Republic of China and Macau remain outliers as they continue to maintain their Zero COVID policies. Cities in the PRC continue to impose neighborhood as well as city-wide lockdowns when even a small outbreak is detected. Macau is currently experiencing such an episode. Any hope of a return to normalcy has been dashed, and its impact is being felt not only on the city’s casino sector, but in all aspects of business and social life.For over two years, gaming industry observers have focused on the dramatic declines in Macau casinos’ gaming revenues, hotel occupancy rates and inbound tourism—and those declines have been dramatic. It was hoped that as the most recent outbreaks in the PRC abated, Macau would begin to enjoy a modest return of tourists from the PRC, and ultimately enjoy a path to economic recovery.Then, on June 18, Macau health officials identified an outbreak of COVID among its population. Daily life, which had been difficult throughout the pandemic, suddenly took a turn for the worse.As the lockdown took hold and border crossings were closed, gaming revenues plummeted and ended the month at USD $307 million. July is expected to be worse. The table below illustrates recent trends.What these numbers do not reflect is the psychological toll that the pandemic has wrought on the city’s population. Even before the current outbreak, residents of Macau spent the past two years in a near dystopian environment. The loss of tourism, as illustrated in the graph below, brought economic hardship on those people and businesses that relied on tourists for their livelihoods.Before this most recent outbreak, residents were required to wear masks wherever they went, and use their Macau Health Department QR Code whenever moving about in the city. The QR Code resides in an app on each resident’s mobile device, and the code is scanned whenever a resident ventures out in public. For instance, a person entering a shopping mall would have their QR Code scanned at the entrance and, upon displaying the color green, would be free to proceed. As the person walked through the mall to various shops, they would again have their app scanned, and their movements tracked. The QR Code became part of daily life, and while obtrusive, it was an accepted part of life under Zero COVID. Then on June 18 when Macau health officials identified its first outbreak since October of 2021, life got decidedly more difficult, and far more stressful.From June 19 through June 30, Macau residents were mandated to undergo a total of 10 COVID tests including nucleic acid tests (NAT) at mass testing locations, and self-administered rapid antigen tests (RAT) with a requirement that positive results be immediately reported to health authorities. Every resident had to adhere to the following testing regimen:
- Test #1 on June 20th: NAT at a central testing facility where residents queued and waited anywhere from 15 minutes to three hours for a test.
- Test #2 on June 22: Self-administered RAT, with test results reported to health authorities.
- Test #3 on June 23: Self-administered RAT conducted prior to visiting a central testing facility.
- Test #4 on June 23: NAT at a central testing facility.
- Test #5 on June 25: Self-administered RAT.
- Test #6 on June 26: Self-administered RAT.
- Test #7 on June 27: Self-administered RAT.
- Test #8 on June 28: Self-administered RAT.
- Test #9 on June 29: Self-administered RAT.
- Test #10 on June 30: Self-administered RAT.
Similar testing regimens have been announced for the first part of July. Residents that fail to attend a NAT testing session risk being escorted to a NAT facility by the police. People with positive RAT results are obligated to immediately inform health authorities, not leave their residences, and wait for an ambulance to take them to a quarantine venue.In addition to adherence to this testing schedule, the city was placed under partial lockdown. All government offices, with the exception of emergency services, were closed along with most businesses. Residents were allowed to go out for essential needs such as groceries but were prohibited from outdoor recreation such as walking in a park. Casinos were allowed to stay open, albeit with reduced staffing levels. All casino employees had to undergo testing each day that they worked.As of June 28, there were a total of 486 cases. By July 3, there were a total of 784 cases and two deaths. As the number of identified cases increased, stress and anxiety among residents started to increase. The QR Code, which had become a ubiquitous part of life, was now viewed with a great degree of trepidation. An apartment building could be designated a yellow zone if one apartment unit or resident tested positive. Residents from those buildings could venture out, but since their QR Code would display yellow, they would be denied entry into any other building. An apartment building is identified as a red zone if two or more cases or apartment units tested positive. All residents in that building would be prohibited from leaving until the building was cleared by health authorities.As this limited lockdown continues into July, new rounds of mass testing have been announced and a full, city-wide lockdown remains a possibility. After two years of debilitating economic conditions, residents are now forced to endure the full brunt of Zero COVID. Early in 2022, many residents saw a light at the end of the tunnel and a slow return to normalcy. Then came a series of lockdowns in cities within the PRC, and a dramatic slowdown in tourist visitation in April and May. In June, just when it was thought it could not get any worse, it got worse.Andrew Klebanow is co-founder and partner at C3 Gaming (Casino Consultants Consortium). He can be reached at Andrew@C3GamingGroup.com.