The city’s casinos saw gross gaming revenue (GGR) surge in January as China’s reopening and the week-long Lunar New Year break sparked an influx of visitors to the gambling hub, fueling optimism the enclave is finally shaking off its zero-Covid doldrums.
The Gaming Inspection and Coordination Bureau (DICJ) said yesterday GGR climbed 82.5% last month year-on-year to MOP11.6 billion ($1.4 billion), beating the median estimate of a 36.5% increase, according to analysts surveyed by Bloomberg. That is the first rise since February last year and the highest monthly revenue since January 2020.
The recovery follows 10 consecutive months of double-digit declines as zero-Covid policies and a crackdown on cross-border gambling kept casinos mostly empty for much of 2022.
Last year’s annual takings were the lowest since 2004 and the enclave — which in 2019 reported GGR six times that of Las Vegas — lost its title of world’s top gambling hub.
China’s Covid reopening on Jan. 8, just ahead of Lunar New Year celebrations in the latter part of the month, sparked a surge in travel. About 451,000 visitors arrived in Macau during the week-long holiday, an almost 300% increase from a year earlier, with most arrivals coming from mainland China, according to official provisional data.
“All the operators that we’ve met were positively surprised by the level of demand during Lunar New Year,” JPMorgan Chase & Co. analyst DS Kim wrote in a note seen earlier this week by MDT. “We feel good about the pace and magnitude of recovery here”, Kim said.
There are signs the rebound may stretch through the first quarter at least. Macau hotel room rates for February and March have risen to pre-pandemic levels.
Analysts surveyed by Bloomberg have also ramped up their estimates for the sector. The median forecast is for 222% growth in GGR this year, from 195% predicted a month ago.
While the Lunar New Year travel spike is a short-term boon for the sector, it’s uncertain whether the sharp pace of gaming revenue growth will be sustained for the rest of the year.
Macau’s casinos face increasing scrutiny from the government as part of Beijing’s push for the city to shift away from its reliance on gambling, as well as a broader crackdown on the once-dominant VIP gambling sector.
While daily gaming revenue is back to around 60% of pre-Covid levels during the peak holiday season, Credit Suisse analysts, including Kenneth Fong, warned about the sustainability of the recovery’s pace. Macau is likely attracting more visitors due to its lack of Covid testing requirements versus Hong Kong and a dearth of international flight capacity in the mainland that is limiting travel options for now, while pent-up demand from Hong Kong residents may wane over time.
A Bloomberg Intelligence index of Macau casino operators gained more than 3% after the data. The gauge rose 7.9% in January, while the benchmark Hang Seng Index rose 10.4% in the same month. MDT/Agencies
