Recent advisory notices issued by a number of local authorities in mainland China, calling on residents not to travel during the February Chinese New Year (CNY) break, further clouds the prospects for Macau gaming during the week-long holiday, industry commentators have told GGRAsia.
Officials in Guangdong province next door to Macau – a major source market for Macau tourism – recently asked residents to spend their Chinese New Year break within the province, as a precaution against the risk of spreading Covid-19. A number of other Chinese provinces and cities has issued similar advice to their inhabitants.
China’s State Council has designated this year’s holiday for the Year of the Ox, as February 11 to 17 inclusive.
“This [mainland China] advisory can but only have a dampening impact on the potential revenue performance of Macau’s gaming industry,” remarked Ben Lee, managing partner of IGamiX Management and Consulting Ltd, and who is also a veteran of gaming operations in Australia and in Macau.
Macau junket investor, Luiz Lam Kai Kuong, told GGRAsia: “Even before China issued this advisory, the [junket] sector was already worried when the resurgence of Covid-19 infection cases were reported in several provinces.”
He added: “The most worrying [thing] is whether [mainland] China will again tighten the issuance of travel visas” for visits to Macau, “if the virus spread worsens in the country”.
Mr Lam further noted: “Overall… the junket sector is cautious, if not pessimistic, on how business will turn out during the Chinese New Year period.”
Hoffman Ma Ho Man, deputy chairman and executive director at Hong Kong-listed Success Universe Group Ltd, an investor in Macau casino resort Ponte 16, told GGRAsia: “It would be an exceptional performance if the business volume of the property could reach anywhere near half of pre- Covid-19 levels during this Chinese New Year.”
Nonetheless, mainland Chinese consumers had shown signs recently of being “more confident in making advance [hotel] bookings when compared to earlier times like November,” he said.
But the Ponte 16 investor acknowledged there was some uncertainty about the Covid-19 situation on the mainland – with what he termed “sporadic outbreaks” – and whether they could be successfully contained before the Chinese New Year break.
Plodding Year of the Ox
Junket investor Mr Lam observed: “There are several uncertainties ahead. First, we are not sure if the pandemic can be well contained. Second, China’s new law criminalising the organising or soliciting of mainland Chinese for overseas gambling will come into effect on March 1.” “For the latter, we still have to see how the law is enforced.”
But he added: “This is definitely not good news [for the VIP sector]. China has vowed to crack down on underground banking activities – which they have already been doing – this just made these activities more covert, and that hurts some players’ accessibility to their gambling funds.”
Macau’s junket sector was already braced “to prepare for the worst” for this year, as some of the local junket firms had extended cost-cutting measures, such as non-paid leave for their employees, Mr Lam explained.
Ponte 16’s Mr Ma said its gaming operation has already been running without any third-party-run VIP gaming clubs. The property currently features mass-play and high-limit areas only.
“Mainland China’s policy direction is basically to strike a blow at VIP gaming. Our projection is that for 2021, Macau’s VIP gaming revenue could reach, perhaps, 15 percent to 20 percent of pre Covid-19 levels,” i.e., relative to 2019 levels, Mr Ma told GGRAsia.
“For mass-play revenue, it might get to 80 percent of pre Covid-19 levels,” he added.
Regarding the latter segment, Mr Ma further explained: “Mainland China has been seeing dramatic growth in outbound tourism demand. And when there is nowhere else in the world they [mainland consumers] can travel to, and Macau is the only travel-bubble partner, this benefits our mass play.”
But gaming consultant Mr Lee was less optimistic about the recovery of Macau’s gaming sector. He said such process could stretch out over “the next two to three years”.
“We are not likely to see anywhere near 2019 levels in 2021,” Mr Lee told GGRAsia.
“For us to see a full recovery, several things need to happen. First, the Covid-19 vaccine immunisation must reach a critical percentage of the Chinese population and its efficacy needs to be significantly high enough to provide the authorities on both sides of the border with a great degree of confidence before the testing and quarantine barriers can be lifted,” Mr Lee stated.
To achieve a speedy recovery of the market, “the Chinese authorities would need to allow full resumption of travel for the mainlanders to Macau”.
He added: “Finally, but most critically, the current restrictions on the flow of funds between both jurisdictions will need to be relaxed. It is unlikely that we will see all these factors improve this year, and consequently, our recovery is likely to stretch out over the next two to three years.”
Jan 28, 2022The long-awaited new outdoor theme park at Resorts World Genting, Malaysia’s only casino resort, is impressive, but likely to be “loss-generating due to heavy depreciation”, says a Thursday...
Jan 28, 2022
Jan 28, 2022
Aggregate number of licensed junkets in Macau as of January 2022