Morgan Stanley: Amid group visa hype, recovery only apparent in 2024

Brokerage firm Morgan Stanley observed that the recovery of the local gaming sector may only be seen by 2024, despite the long-awaited announcement of group visa reinstatements.

These comments echo similar sentiments issued by industry analysts, as the spending power of group travelers is weaker than that of those holding individual visit scheme (IVS) visas.

“Assuming package tours and IVS e-visas are relaxed in October, we think mainland visitation numbers could reach 45% of 2019 levels and mass revenue of 60%,” the brokerage said in a note. 

“Even after the relaxation of these two factors, we await the HK/Macau border opening and relaxation of Covid test validity periods (from 48 hours currently to seven days) for full economic recovery,” the analysts added.

Earlier, JPMorgan Chase & Co. analyst DS Kim noted the resumption of e-visa and group tours should “alleviate friction of a Macau trip, as well as signal to many that it’s OK to visit Macau – in turn boosting demand into the year-end holidays and 2023.”

However, Angela Hanlee, Bloomberg Intelligence Analyst on APAC Gaming and Hospitality Research, warned that forecasts for the city’s gross gaming revenue (GGR) for this year will not be altered as group tours have never been a major driver for Macau casinos because their spending power is not high.

Meanwhile, casino stocks are still on the rise.

Leading the pack was Melco International Development with a 9.18% increase, followed by MGM China with a 7.01% increase. Wynn Macau, Sands China and SJM Holdings also recorded increases from 3% to 5%, while Galaxy Entertainment Group had a minor increase of 0.64%.

Gaming shares soared on Monday, with the highest surge recorded in six months following a long-awaited announcement that will bring an end to the tourism drought that has negatively impacted the economy.