Macau: Gaming revenue up during October's Golden Week, but still well below pre-Covid figures

According to latest reports, Macau's casinos are seeing daily average revenues double when compared to the first nine days of September. However, despite these efforts, tourism revenue declined sharply over China's week-long National Day break as strict Covid rules held travelers back from spending, especially when paired against pre-pandemic levels. As reported by JP Morgan Securities, GGR for the first nine days of the month was MOP 1.7 billion ($210.3 million), which is approximately MOP 190 million ($23.5 million) a day.

While this is significantly up from September, the figure was only a fraction from pre-Covid levels on Golden Week, when daily GGR had achieved the MOP 1 billion mark, reports Macau Daily Times. Wynn Resorts sank 12% for its biggest decline since March 2020, while Las Vegas Sands slumped 7.6% after tourism revenue fell 26% to 287 billion yuan ($40.3 billion) over the Golden Week holiday from a year ago. Melco Resorts & Entertainment dropped 7.3% and MGM Resorts International dropped 3.9%.

"October Golden Week wasn’t as golden as some had hoped," JPMorgan analyst DS Kim said in a report. While gross gaming revenue for the first nine days of October was twice September’s run-rate, it’s still only about 15%-20% of pre-Covid figures, he said as reported by Bloomberg. "By segment, we estimate mass GGR has recovered to 30% to 35% of pre-Covid Golden Week levels, versus VIP at a mid-single-digit recovery," the JP Morgan analyst further stated.

Moreover, Citigroup analysts followed up by slashing their forecast for Macau's gross gaming revenue in October to 5.5 billion patacas ($680 million) from 7 billion patacas ($866.2 million), citing disappointing revenue during the first nine days of this month. 

The October 1 to 7 National Day Holiday recorded some 182,284 visitor arrivals, exceeding the expectation of the local government. But despite solid visitation numbers, a recovery in gross gaming revenue may have been impacted by the recent Covid-19 outbreak in China, they said.

However, the average entries were the highest since the city faced the largest outbreak in mid-June this year, which led to a halt in travel. As an effort to boost economic recovery, last month Chief Executive Ho Iat Seng announced that China would resume an e-visa scheme for mainland travelers and permit group tours, signaling a potential path to recovery.  

With this move, J.P. Morgan expects that the pent-up demand for mass-market gaming remains "pretty solid" and would be better than their former forecast. This time, the brokerage is betting that the mass-market gaming revenue will rise to 40% to 50% of pre-pandemic times in December.

Macau's Chief Executive Ho Iat Seng

However, the city will continue to face headwinds amid the current turmoil in the gaming sector, as mainland China and Macau continue to adhere to their zero-Covid policies. According to the latest local news, currently, some districts in Zhuhai are under lockdown due to new cases over the weekend. 

The National Day Golden Week is usually a peak season for casino operators. The Nasdaq Golden Dragon China Index of Chinese companies listed in the US dropped 5.3%, extending its decline for the fourth day.