Post-CNY slowdown drags February GGR recovery, IVS to help tourism in GBA

The recent decision by mainland authorities to include two more cities in the Individual Visitation Scheme (IVS) is expected to have a positive impact on the ongoing recovery of tourism in Macau and Hong Kong.

According to Goldman Sachs analysts, Macau’s gross gaming revenue (GGR) for February reached MOP18.5 billion, a recovery to 70% of the pre-Covid levels. However, the February GGR recovery is lower than the respective 78% and 81% recoveries reported in January this year and December of the previous year.

The investment bank attributed this decline to a more pronounced than anticipated slowdown following the Chinese New Year holidays. Daily GGR dropped from MOP715 million in the first two weeks of February to MOP543 million in the final weeks, returning to levels seen towards the end of last year.

Assuming a consistent trend in VIP GGR at approximately 30% of pre-pandemic levels, the analysts estimate that mass market GGR in February was exceeding 100 percent of the pre-pandemic run-rate.

Goldman Sachs analysts anticipate that GGR data for March and April will remain stable due to seasonal factors before picking up again during the Labour Day holidays in May.

The firm also highlighted that casino operators have responded positively to mainland authorities’ decision to include two additional cities, Xi’an and Qingdao, in the IVS.

“This move is expected to enhance the recovery of both Macau and Hong Kong’s tourism industries, as it increases the total number of IVS cities from 49 to 51 and expands the scheme’s coverage of mainland China’s population and GDP from 32%/45% to 33%/47%, respectively,” stated the investment bank.

Q1 casino revenues may reach above 5%

Deutsche Bank Securities Inc has estimated that Macau’s GGR for March will be slightly below USD2.42 billion, reflecting a month-on-month increase of approximately 5.7%. This growth is in comparison to the GGR of USD2.29 billion recorded in February, as cited in a report by GGR Asia.

However, despite the positive outlook, Deutsche Bank’s analyst Carlo Santarelli mentioned in a memo that the forecast for March GGR indicates a 2.2% decline per day compared to the previous month. Nevertheless, this decline is still an improvement over the average sequential per day decline of 7.7% observed in March relative to February.

In comparison to the same month in 2019, before the Covid-19 pandemic, Deutsche Bank’s March forecast shows a decline of 25.2%.

The institution now predicts that Macau’s GGR for the first quarter of this year will reach approximately USD7.15 billion, representing a year-on-year increase of 65% and a sequential increase of 5.6%. However, this quarterly figure will still be around 25% lower than the corresponding period in 2019. Staff Reporter