Macau gaming revenues fell 94.5% in August, marking the fifth straight month of a better than 90% decline, even as travel and visa restrictions from some Chinese regions were relaxed for the first time since they were implemented in the Spring.
Analysts were hopeful that an increase in travel to Macau in September would boost results ahead of October’s Golden Week holiday.
“While a 94.5% drop in gross gaming revenue might normally cause a panic reaction, we would expect to witness a relative no reaction to the August Macau results,” Stifel Financial gaming Steven Wieczynski said in a Tuesday research note. “We fully believe investors understand what the Macau market is up against at this point and remain prepared for an uncertain near-term timeframe.”
During August, Macau gaming revenues declined 94.5% to $167 million, according to the region’s Gaming Inspection and Coordination Bureau. For the first eight months of 2020, Macau gaming revenues are down 81.6% to $4.55 billion. A year ago at this time, Macau casinos had produced almost $25 billion.
In 2019, Macau casinos produced $36.6 billion in gaming revenues.
Macau’s troubles began in January when the coronavirus outbreak forced the cancelation of all Chinese New Year activities and led to a 15-day shutdown of the region’s casino in February. Las Vegas Sands, Wynn Resorts, and MGM Resorts International all operate large resort-casino holdings in Macau.
China has announced that tourist visas, through which a majority of visitors enter Macau, would be reinstated for all provinces from Sept. 23.
Macquarie Securities gaming analyst Edward Engel, who is based in Hong Kong, suggested September could be the first month since March that gaming revenues don’t record a 90% decline. However, he said investors are concerned that Mainland China regulators will slow Macau visitation.
“The Macau government has also been aggressively promoting Macau visitation in recent weeks, and we do not believe Macau would purposely overreach beyond Mainland policymakers’ comfort levels,” Engel said. “Rather, we believe Mainland regulators are more tolerant of mass visitation than investors acknowledge.”
Engel pointed out that the end of August marked the first full week that Macau benefited from Zhuhai tourist visa reinstatement. Despite the visas being were reinstated on Aug 12, most visas weren’t accessible until Aug 22.
Over the last few days, visitation increased to roughly 10,000 per day from Mainland China, he said. A year ago, Macau averaged 108,000 visitors a day.
“Given low volumes and VIP hold rate volatility, it’s difficult to read too much into the headline gaming revenue number,” Engel said.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
