Macau Now? Signs of Hope Shift from Wistful to Empirical

A recent burst of growth has raised hopes that a Macau recovery has arrived.

Out of the Gate

The first ten days of the month from 1-11 July revealed by Sanford C. Bernstein Ltd research a 16% increase in Macau’s gross gaming revenue (GGR) compared to the last 10 days of June.

Sequential Rise

It’s also a 29% month-on-month rise from June’s overall figures: GGRAsia further reports that Macau’s month-to-date GGR for the 11 days of July of MOP3.1bn ($387m) rendered a daily average rate of MOP282m.

Quarterly Rise

The figure represents a 64% decline from pre-pandemic figures and now unrealistic expectations of pre-pandemic July 2019. A more important comparison is that revenue from July 2021 is set to pass the total on record for the period ending March 2021, supplemented by a 25% month-on-month increase in average daily rolling volume.

Weathering June

The fast start to July offsets a difficult June, when GGR dropped 34% month-on-month and was a harder month for Macau. The disproportionately rough June is traced to a spike in Covid-19 cases in neighbouring Guangdong district, causing border movement restrictions in the form of visitor quarantine requirements limiting patronage at Macau casinos.

Drivers of July

The July burst can be directly attributed to the lifting of travel restrictions, with analysts looking for a strong GGR rebound for the full month of July.

Coordinating Traffic

Macau is in talks to establish secure travel bubbles with major nearby regions including Hong Kong, where despite a recent outbreak negotiations remain a strong step in the recovery direction.

New On-Shoring Revenues

Another possible recovery sign on the horizon is the potential benefits to Macau's mass-market table and slot sectors of next year's “on-shoring” of Chinese consumer play. Morgan Stanley research reports that patronage from mainland China may be steered away from what in in pre-pandemic times might have gone to neighbouring Asia Pacific (Apac) gaming venues, with some 20% of those sectors flowing into Macau in 2022 could mean an additional US$2.06-billion in revenue for the Chinese gambling hub.

Outlook

Environmentally induced travel restrictions moving forward in and around China appear to be the deciding factor in how fast Macau can continue to recover, in what form, and to what extent.