Visitor arrivals to Macau numbered 2.27 million in March, down by 13.5 percent year-on-year, data from the city’s Statistics and Census Service show. The city had not recorded such a low aggregate monthly figure since September 2012, when it received 2.16 million visitors.
The number of tourists from mainland China decreased notably by 17.6 percent year-on-year to 1.46 million in March. The government data show that mainland visitors travelling to Macau last month under the Individual Visit Scheme (IVS) dropped by 9.7 percent from a year earlier.
Total visitor arrivals in the first three months of 2015 fell by 3.6 percent from the prior-year period to 7.41 million. Mainland Chinese accounted for 67.9 percent of the aggregate number of visitors in the first quarter – or 5.03 million visitors, down by 2.9 percent year-on-year.
The official figures show that March has reversed the slight growth trend seen in January and February, but the magnitude of the monthly decline “is not surprising”, said analysts Grant Govertsen and Felicity Chiang of Union Gaming Research Macau Ltd.
“While the headline decline will cause more concerns as to the health of Macau, we would argue that visitation trends have been fairly consistent for months now and that visitation to casinos been tracking negative for at least half a year,” Mr Govertsen and Ms Chiang said in a note on Monday.
Analysts at UBS Securities Asia Ltd said the headline visitor numbers “does not indicate strong/weak overall gaming demand, as GGR [gross gaming revenue] is skewed to high-end play”.
Gross gaming revenue (GGR) in Macau fell 39.4 percent year-on-year in March to approximately MOP21.49 billion (US$2.69 billion), and 36.6 percent for the whole of the first quarter, according to official data.
The number of Chinese tourists – and thus demand for hotel rooms in Macau – has been decreasing amid a decline in the purchasing power of mainland tourists, as well as due to protests in Hong Kong and regional competition issues, say investment analysts.
The Hong Kong Economic Journal reported that judged year-on-year there have been fewer hotel room bookings for the upcoming Labour Day holiday period surrounding May 1. That is despite the fact the holiday is celebrated across China and this year includes a three-day weekend. So far only five of the 18 resorts and hotels managed by Macau’s top six casino operators have been fully booked for May 1-3, compared with 13 during the same period last year, the newspaper said, citing its own survey.
In January, the head of the Macau Government Tourist Office forecast that the number of visitors to Macau could grow by 5 percent in 2015. Macau saw a 7.5 percent jump in visitors during 2014, to 31.5 million arrivals.
A Macau official has meanwhile confirmed that the government has already asked Beijing to “improve” the system that lets independent Chinese travellers visit Macau.
April GGR trend
“While weak high-end demand is well documented, we believe the latest visitation and revenue data reflect lacklustre demand at the mid to low end,” UBS analysts Anthony Wong and Angus Chan said in a note on Monday.
“We estimate non-baccarat mass revenue dropped 6 percent quarter-on-quarter in the first quarter to MOP3.9 billion, after dropping 10 percent quarter-on-quarter in the fourth quarter of 2014 (showing smoking ban impact from October),” they added.
Mr Wong and Mr Chan estimate that April daily GGR has been tracking about MOP640 million month-to-date, on track to reach a full month forecast range of between MOP18.1 billion and MOP19.8 billion, “or down 37 percent to 42 percent year-on-year”.
“We believe there have been little improvements in sequential VIP/mass volumes,” they said.
The average daily revenue at Macau casinos has dropped slightly in the week of April 20-26 from the previous week, said Credit Suisse AG analysts Kenneth Fong and Isis Wong.
“Assuming a run rate of MOP600 million a day for the rest of month (all weekday and usually quiet ahead of Golden week holiday), April GGR may drop 39 percent year-on-year (similar to -39 percent year-on-year in March) to MOP19.1 billion,” said the Credit Suisse team.
“Hotel rooms for [Labour Day] Golden Week are so far not fully booked. As such, we don’t expect a strong Golden week holiday,” added Mr Fong and Ms Wong.
In a note on Monday, Cameron McKnight of Wells Fargo Securities LLC and his colleagues Rich Cummings and Tiffany Lee said they expect a 38 percent to 39 percent year-on-year decline for April GGR, which “could imply -45 percent to -50 percent year-on-year VIP and -20 percent to -30 percent year-on-year mass growth”.
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"The demographics of Tokyo, Yokohama, and Osaka (possible Japanese urban gaming resort locations) warrant larger gaming floors [than 15,000 square metres]"
Analyst at investment research firm Morningstar