GGRAsia – Mixed signs on Macau’s Chinese overnighters: analysts

Mixed signs on Macau’s Chinese overnighters: analysts

Apr 26, 2016 Newsdesk Latest News, Macau, Top of the deck

Macau hotels are likely to have an average occupancy rate of 85 percent to 95 percent during the three-day Labour Day holiday – spanning Saturday, April 30 to Monday, May 2 – and an average daily room rate during that period that is 20 percent to 30 percent above non-holiday periods. That is according to comments by Cheung Kin Chung, the vice president of the Macau Hoteliers and Innkeepers Association, quoted by the Chinese language newspaper Macao Daily News on Sunday.

A note on Monday from Daiwa Securities Group Inc analysts Jamie Soo, Adrian Chan and Jennifer Wu stated however that Macau’s gaming performance in the run up to the holiday period was “lacklustre”.

“On the ground, we continue to observe overall weak gaming volumes across properties. Early leading indicators, i.e. hotel pre-booking, overall sentiment, etc., of May Golden Week are rather lacklustre,” noted the brokerage, referring to the Labour Day holiday season.

A note the same day from brokerage Sanford C. Bernstein Ltd was more upbeat regarding the Macau market’s progress in attracting mainland Chinese visitors staying overnight.

“We believe the new large casino resorts (Studio City, Galaxy Macau Phase 2) have started to attract overnight visitors from further parts of China,” said the brokerage’s analysts Vitaly Umansky, Simon Zhang and Clifford Kurz.

They were referring firstly to Melco Crown Entertainment Ltd’s mass-market focused property that launched on October 27, and secondly to the latest phase of Galaxy Entertainment Group Ltd’s flagship Cotai venue, which opened on May 27, 2015.

Data from Macau’s Statistics and Census Service, issued on Friday, showed that the March tally of visitors to Macau rose by 4.2 percent year-on-year to 2.37 million arrivals, while the number of overnight visitors – a category of traveller that normally spends a lot more than same-day tourists – rose by 14.1 percent year-on-year. The tally of same-day visitors in March declined by 3.9 percent from the prior-year period.

Fluctuations in the aggregate number of Macau visitors may not always correlate positively with spending by visitors, observed the bank Morgan Stanley in a note issued on Friday.

“March visitor data suggests that spending per capita deteriorated in March as mass revenue per Chinese visitor fell 10 percent year-on-year,” compared to zero fluctuation in such spending judged year-on-year in January and February said a note from analysts Praveen Choudhary and Alex Poon. They cited proprietary research and data from Macau’s statistics service and the city’s casino regulator, the Gaming Inspection and Coordination Bureau.

The Morgan Stanley team said the fall in March spending by Chinese mass-market visitors had occurred “despite stronger Chinese overnight visitor growth of +10 percent year-on-year, versus [fluctuation in] day trippers of -5 percent year-on-year”.

The number of visitors to Macau in March from mainland China increased by 1.8 percent year-on-year to approximately 1.48 million, or 62.7 percent of all visitors that month, showed data from the statistics bureau issued on Friday.

In a Monday commentary on likely casino gross gaming revenue (GGR) for Macau in April, David Katz of Telsey Advisory Group stated: “According to our industry sources, based on the most recent week’s play, GGR in Macau is tracking down approximately 10 percent month-on-month and 15 percent year-on-year.” He said the figure included revenue from electronic gaming and anticipated an April GGR of HKD15.8 billion (US$2.04 billion).

Analyst David Bain of brokerage Sterne Agee CRT estimated that – based in unofficial data up to Sunday – Macau was tracking for a GGR decline in April of 16 percent judged year-on-year.