Local gaming revenues will likely only recover to levels similar to those recorded before the Covid-19 epidemic in the third or fourth quarter of this year as travel restrictions from Mainland China are gradually lifted, analysts indicated to Macau News Agency (MNA).
Gross gaming revenues in February recorded an 88 per cent year-on-year drop to MOP3.1 billion (US$387 million), with that same month having seen a 15-day suspension on casino operations.
This represented the lowest monthly results recorded in Macau since 2005.
In total, January and February only reported MOP25.2 billion in accumulated gaming results, a 50 per cent year-on-year decrease.
The occupancy rate of hotels and boarding houses in Macau has fallen to levels as low as 11.8 per cent in February, with just 4,500 tourism entries recorded in one day that same month.
“Assuming the epidemic peaks in the next two months, we might see a recovery in Q3/4. The underlying manufacturing sector in Guangdong province is fragile and will need to recover before we can start to see the players returning to play over more,” IGamiX Management & Consulting, Ben Lee, told MNA.
In a note issued today, analysts at Sanford C. Bernstein stated that the recovery of the local gaming sector would be driven by transportation from Mainland China to Macau and surrounding airports in the Greater Bay Area being gradually reinstated; together with pent up demand in the premium mass and VIP segments and Chinese government stimulus raising confidence levels of players and junkets.
“Once the COVID-19 situation stabilizes and outlook on contagion begins to improve, we expect a solid recovery in Macau,” the brokerage added.
Due to the outbreak, Chinese authorities have stopped travel groups and stopped issuing individual visit scheme (ITV) for visits to Macau and Hong Kong by mainland residents, effectively barring solo travel to the SARs.
Currently, anyone entering Macau also has to fill out a health questionnaire and undergo body temperature checks. But since February 20, tourists that in the 14 days prior passed through regions considered to be of a high risk of Covid-19 contagion have to undergo medical examinations lasting from six to eight hours; unless they can provide a medical certificate stating they are free of the novel coronavirus.
The Chinese provinces of Hubei, Henan, Zhejiang and Guangdong, together with Beijing, Shanghai, and Chongqing, were all considered high-risk areas, with this list to be regularly updated by local authorities.
Several flights to and from Macau and Hong Kong have also been cancelled due to the epidemic; while transport between the two SARS have also been seriously reduced.
The brokerage also estimated that if no improvement in visa issuance and travel is seen, March gaming results could record a year-on-year drop between 70 to 80 per cent year-on-year.
Niall Murray, chairman of consulting company Murray International, also expressed to MNA that he believes March results will remain weak as visitation from China will be low due to Chinese citizens inability to get travel visas, and valid health declarations to enter Macau.
“Hong Kong visitation will remain low due to fear of contamination and suspended/reduced ferry services and international travel will be highly curtailed due to the major flight cancellations until March 31. So visitor numbers will be very low for March, with a slight increase over February”.
Nevertheless, the gaming expert believed April visitor numbers could show improvements if Covid-19 containment efforts continue showing results and lead to a major reduction of the number of new infections and deaths.
Mainland China has so far recorded 2,912 deaths and 80,026 confirmed cases, although the epidemic progression in the country has slowed down in the last weeks.
“This may lead to renewed issuance of travel visas and clean bill of health certificate for visitors to Macau from China. This may also lead to the renewal of ferry services from HK and the lifting of flight restrictions from other countries,” Mr. Murray added.
Nevertheless, Mr. Murray advised that a slow and gradual easing of travel restrictions was required to better reduce health risks and envisioned that gaming results would only go back to full force in the next three to six months.
“If they re-open the flow of visitors too fast, due to the difficulty in detecting infected persons, we are very likely to experience a setback in containing the number of cases and preventing deaths […] If the private sector works hand in hand with the government to contain the virus we will be successful. If greed leads to throwing caution to the wind, then we will experience a setback and make matters worse,” the gaming consultant added.
