Following a dismal showing in June, gross gaming revenue (GGR) in Macau is off to a strong start in July, according to analysts.
In a note out Monday, research firm Bernstein said GGR in the world’s largest casino center jumped 16 percent in the first 11 days of this month, compared with the last 10 days of June. On a month-to-date basis, gaming revenue in the special administrative region (SAR) is outpacing the June mark by 29 percent.
That’s a welcomed sign after June GGR tumbled 37 percent. That was the worst monthly decline this year. The June tally was also 73 percent below the pace set in June 2019, before the coronavirus pandemic. Gaming analysts are measuring this year’s data in both the US and international markets against 2019 levels because the health crisis made 2020 numbers incomparable.
Analysts say the uptick in July GGR is the result of recently relaxed health and travel protocols. For example, the SAR recently ditched its quarantine policy on visitors from neighboring Guangdong province. Tourists from one city in the province of Yunnan are subject to Macau quarantines. Additionally, the gaming hub moved its negative COVID-19 test policy to seven days from days prior to a visitor’s arrival.
For Macau, Still Work to Be Done
In another sign of potentially good news for the gaming enclave, the Macau Novel Coronavirus Response and Coordination Center is working on health codes and travel bubble plans to allow visitors from Hong Kong to enter the SAR. Guangdong and Hong Kong are two of the most important arteries for delivering tourists to Macau.
However, a timeline for implementing the blue health code system remains elusive. It hangs in the balance while other parts of the world are grappling with new variants of the coronavirus.
Health officials elsewhere are beginning to recommended reinstating certain restrictions to counter the Delta variant (e.g. World Health Organization, Israel, Los Angeles),” said Fitch Ratings in a recent note.
The ratings agency estimates Macau will return to 2019 revenue and visitation levels in 2024, lagging Las Vegas and US regional casinos, which are expected to approach pre-pandemic numbers in 2023 and 2022, respectively.
While average daily revenue this month is off 64 percent relative to July 2019, Bernstein said VIP volume in Macau is up 25 percent from June. That’s an encouraging sign, because for much of this year, analysts expected high-end players to stay away from the SAR, leaving the heavy lifting to mass market gamblers.
Increasing vibrancy among VIP patrons is a positive for operators such as Melco Resorts & Entertainment and Wynn Resorts, whereas Las Vegas Sands is an example of a beneficiary from strong mass market spending.
If the current GGR pace holds, Macau should see a month-over-month increase of 50 percent, according to the Bernstein analysts.