(Xinhua/Cheong Kam Ka)

Gradual border opening has officially begun – Brokerage

The announcement of further visa relaxation by mainland China authorities signals that Macau’s ‘gradual border opening has begun’ but with full recovery of the local gaming sector expected only in 2024, Morgan Stanley noted.

During this weekend Chief Executive Ho Iat Seng announced that package tours from mainland China are set to return to the SAR in November, while electronic visas are set to be re-issued between late October and early November, in a move aimed at reviving the city’s tourism industry and economy.

Ho estimated that daily visitation could rise to 40,000 once implemented in late October or early November, with the daily average in 2019 (pre-COVID) previously at 108,000, of which 76,000 were from the mainland and 20,000 from Hong Kong.

In a recent dispatch, brokerage Morgan Stanley noted that of those 76,000 mainlander visitors, 47 per cent used individual visas and 23 per cent used package tours.

‘Assuming package tours and IVS e-visas are relaxed in October, we think mainland visitation could reach 45 per cent of the 2019 level and mass revenue 60 per cent,’ the dispatch noted.

‘Even after these two relaxations, we await HK/Macau border opening and relaxation of COVID test validity (from currently 48 hours to 7 days) for full recovery’

Thus, although 2023 may not match pre-COVID revenues or profits, MS expected 2024 to surpass 2019 mass revenue, with local gaming concessionaires possibly returning to positive EBITDA.

The current gaming concessionaires have accumulated unprecedented losses since 2020, due to COVID-19 restrictions, with Secretary for Administration and Justice André Cheong Weng Chon stating that the central government’s decision to resume package tours and electronic visas to Macau will give the seven bidders for gaming licences “a certain confidence in the future”

The recent announcement of further easing of travel movements generated a surge in the incumbent concessionaires’ stock prices.

The first round of negotiations under the city’s public tender for new gaming concessions was initiated yesterday (Monday) with a total of seven bidders.