The temporary suspension of operations at all Macau casinos for 33 hours this week, due to the passage of Super Typhoon Ragasa, is estimated to have cost the industry about MOP880 million (US$109.9 million) in missed gross gaming revenue (GGR). That is according to CLSA analyst Jeffrey Kiang in comments to GGRAsia.
Mr Kiang, as well as Ben Lee, managing partner at casino industry adviser IGamiX Management and Consulting Ltd, respectively told GGRAsia the precautionary shutdown was likely to have caused a 5-percent haircut in otherwise-expected September GGR performance.
Super Typhoon Ragasa passed within a 100-kilometre (62-mile) radius of Macau.
“Casinos were forced to close from 5pm on September 23, to 2am on September 25, roughly 33 hours,” noted CLSA’s Mr Kiang.
He added in his written reply to GGRAsia: “For the 21-day period from September 1 to 21, brokers’ channel-check data suggest the average GGR was roughly MOP640 million per day. Therefore, a reasonable estimate of the GGR impact from the shutdown would be roughly MOP880 million in total (or roughly 4.6 percent to 4.7 percent of channel-check estimates of September revenue of MOP18.65 billion to MOP19.3 billion).”
Mr Kiang observed, however, that investors had probably already factored in some volatility in their September expectations.
The typhoon-related closure should have been “somewhat expected” by the market, as September is “traditionally a month of typhoons”; he said. September also falls between the summer holiday period and October’s Golden Week, contributing to volatility in consumer demand for Macau’s casino services, the CLSA analyst added.
The latter holiday is traditionally a peak demand period for Macau’s casinos, linked to China’s National Day on October 1. This year, the official holiday for residents on the Chinese mainland spans eight days, from October 1 to 8 inclusive.
According to checks conducted earlier this week by GGRAsia, over 20 luxury hotels in Macau – all housed within casino resort complexes – appeared to have sold out rooms for at least five nights during the upcoming Golden Week.
Looking at the remaining days in September, CLSA’s Mr Kiang said: “While we should expect daily GGR to start picking up towards the beginning of October’s Golden Week, we are looking at 10-percent year-on-year growth in September’s [full-month] GGR, to MOP18.9 billion.”
IGamiX’s Mr Lee concurred that “whenever the [casino] doors are shut, there is bound to be an impact on revenue, the only question being the size of the impact.”
He noted that the latest temporary closure had “covered two full nights” of potential activity at gaming tables. That meant, according to Mr Lee, an impact “in the vicinity of circa 5 percent” against previous projections for full-month GGR.
Limited damage
Despite the temporary disruption caused by Super Typhoon Ragasa, by Thursday afternoon (September 25) there were no major reports of storm-related damage affecting the city’s casino resorts.
On the Macau peninsula, a number of fallen trees was still awaiting collection near the StarWorld Hotel, MGM Macau, and Wynn Macau properties (pictured). There were no exterior signs of damage to those venues nor to the larger casino resorts in the Cotai district, from GGRAsia’s observations.
Although flooding was recorded on Wednesday in Macau’s Inner Harbour district, as Ragasa battered the city, the Ponte 16 casino resort in that area was not significantly affected, according to management.
“The typhoon hasn’t caused any damage to our property, thanks to the upgraded sewage and flood-prevention improvement works done,” Hoffman Ma Ho Man, deputy chairman of Hong Kong-listed Success Universe Group Ltd, told GGRAsia. His company is an investor in the Ponte 16 project.
The Ponte 16 resort complex runs parallel to the eastern bank of the river that links the Inner Harbour to open water. It is a low-lying area.
A gaming floor at the property was flooded during Typhoon Hato in 2017, which badly affected Ponte 16’s operations.
Following that incident, the property installed floodgates and introduced other measures to guard against severe-weather flooding, especially typhoon-related disruption.
