Macau’s 70.5% gaming revenue decline wasn’t much of a surprise, analysts said Tuesday. The market’s visitation levels are improving but spending levels inside the casinos remain somewhat muted.
Several analysts were encouraged Tuesday as revenue drop-offs, although steep, are better than the six straight months of 90% gaming declines that ended in October.
Macau, considered the world’s largest gaming destination in terms of revenue, continues to be hampered by the coronavirus pandemic that halted Chinese New Year celebrations in January and closed casinos for 15 days in February.
“What we continue to be the most encouraged by are the visitation patterns that Macau is witnessing,” Stifel Financial gaming analyst Steven Wieczynski told investors. “The market has recently shown visitation levels that have not been seen since the pandemic started.”
Macau’s Gaming Inspection and Coordination Bureau said Tuesday casinos brought in $845.34 million during November. The raw number was down 7.2% from October.
For the first 11 months of 2020, Macau’s gaming revenue is down 80.5% to $6.58 billion. In all of 2019, Macau casinos produced $36.6 billion in gaming revenues.
Las Vegas Sands, Wynn Resorts, and MGM Resorts International are the U.S. companies with casino operations in Macau.
The challenge for Macau continues to be visitation. In late November, the market saw a spike due to the Macau Grand Prix race that accounted for 28,000 visitor arrivals – the highest single-day total in the last nine months.
But analysts said that might be the only boost until Macau eases visa restrictions from Mainland China and ends the 14-day quarantine requirements for travel from Hong Kong and Taiwan.
“We do not expect Macau to relax its health quarantine requirements for Hong Kong residents, given Hong Kong’s current fourth COVID-19 wave,” said Jefferies gaming analyst David Katz. “We expect progress in the recovery to be beyond Christmas.”
Most predictions, which include hope for vaccine development, peg the Chinese New Year holiday, which begins on Feb. 12, as a target date in the recovery process.
Wieczynski said mass-market customer improvement, however, won’t be enough to move the needle. Gaming revenues will remain muted, he said, until high-end players “feel comfortable” enough to travel
“Visitation levels are an encouraging sign and lead us to believe that there remains strong pent-up demand,” he said.
Macau is the only destination in China with legal and regulated casinos.