Early signs of recovery

After a difficult 2020 impacted by the effects of the COVID-19 pandemic, Macau casinos saw gross gaming revenue (GGR) increase for the first time since 2019 last month.

Macau gaming revenue totaled MOP 7.31bn ($915.3m) for the month of February

According to data released by Macau’s Gaming Inspection and Coordination Bureau (DICJ), Macau gaming revenue totaled MOP 7.31bn ($915.3m) for the month of February. That corresponds to an increase of 136% from 2020 levels – the first year-on-year GGR rise since September 2019.

Despite some signs of recovery, Macau GGR still fell 71% from pre-COVID levels in February 2019. The total also dropped 9% month-on-month, with January revenue totaling MOP 8.02bn ($1bn). Combined GGR through January and February showed a 39% year-on-year decline, at MOP 15.33bn ($1.91bn).

Restrictions limit Chinese New Year

Although the DICJ data shows Macau GGR has improved from 2020 levels, border restrictions continue to impact casinos in the Chinese gambling hub. Macau authorities have introduced a stricter visa application process in a bid to combat the virus spread, in addition to a stringent coronavirus testing process for visitors.

As a result, visitor numbers for the Lunar New Year holiday dropped dramatically from 2020 levels. During what is usually one of the busiest periods for Macau casinos, arrival numbers for the mid-February holiday fell 65% year-on-year. In the first six days of Chinese New Year, Macau saw around 12,897 visitors per day, well below government forecasts of 16,000 to 20,000.

That said, analysts from JP Morgan reported an uptick in casino revenue towards the end of the Chinese New Year period. DS Kim and Derek Choi calculated that for the third week of February, Macau’s daily GGR doubled in comparison to the previous two weeks. This totaled MOP 466m ($58.3m) per day. In a late-February note, the analysts described the increase as “well expected”, with casinos usually experiencing a revenue rise in the latter weeks of the holiday period.

Casino operators remain hopeful

As the Macau market shows some indications of its gradual recovery, the region’s casino operators have expressed optimism over their future in the gambling hub.

Last Thursday, Melco Resorts and Galaxy Entertainment reported healthy balance sheets in trading updates for the final quarter of 2020. Despite posting year-on-year declines in overall revenue, both companies saw EBITDA levels return to growth.

All the pieces are getting incrementally better”

Commenting on the results, Lawrence Ho, Melco chairman and CEO, described “strong demand” in Macau towards the latter end of the Chinese New Year holiday. He also praised the successful rollout of vaccinations in China and its positive impact on the restrictions to Macau’s borders. “All the pieces are getting incrementally better,” Ho observed.

Meanwhile, Dr Lui Che Whoo, chairman of Galaxy Entertainment, expressed similar faith in Macau’s ability to bounce back. He said Galaxy had witnessed “signs of early recovery” after the reinstatement of the travel bubble with mainland China. However, Whoo believes it could take a few more quarters before the casino operator experiences the full benefits of this.