Full gaming market recovery only in 2025 – Brokerage

The Macau SAR gaming market will only recovery to pre-pandemic levels by 2025, analysts at Sanford C. Bernstein have estimated.

According to a report issued by the brokerage, its forecasts for the timeline of the Macau gaming recovery had to be updated to take into account the recent travel disruptions impacting the fourth quarter and a delayed 2022 recovery.

Therefore the gross gaming revenue volume in 2021 is expected to reach only 31 per cent of 2019 levels (MOP292.46 billion), with that percentage gradually growing to 59 per cent in 2022, 87 per cent in 2023, 96 per cent in 2024 and then 106 per cent by 2025.

However, while mass-market results are forecast to reach 144 per cent of 2019 levels by 2025, VIP results are estimated to only recover to about 46 per cent, as this segment ‘fades away’.

In total, Macau detected 12 local COVID cases in two batches connected to a returning traveler from Turkey on Sept 24.

As a result, the Macau daily GGR for the first 10 days of October was down 85 per cent when compared to October 2019, with a minuscule Golden Week visitation of only 1,200 arrivals per day, only 1 per cent of pre-pandemic times.

‘Golden Week has been completely ruined due to the border closures, and we forecast October GGR to be down nearly 80% vs. 2019, but this is likely to be even worse if the border controls measures with Zhuhai/China stay longer than expected. At this point, we expect GGR improvement in November/December, but do not expect opening up of Hong Kong or easing China visas until next spring and summer,’ the brokerage adds.

The city completed its third round of COVID mass-testing with all test results returning negative, however, there is still no timing for an eventual lifting quarantine requirement imposed by Zhuhai city authorities.

‘Zhuhai has said that the city/mainland may not put a strict policy to require 14-day of zero cases to reopen border with Macau. As Macau reported the last local case on Oct 9, if no new cases found after, the maximum 14-day length of border closure could extend until Oct 23, but could open sooner,’ Bernstein noted.

Therefore the group now expects Macau gaming revenues to only show some recovery in 2022 to 59 per cent of 2019 levels, helped by new room supply coming into Macau and reopening of travel from HK and China.

‘We remain very bullish on 2023 mass recovery, while reducing further our VIP forecasts as the junket business will remain structurally constrained’.