Macau GGR Recovery Hopes Stifled by Border Restrictions, Analysts See No End in Sight
Posted on: July 2, 2020, 12:01h.
Last updated on: July 2, 2020, 12:20h.
Gross gaming revenue (GGR) in Macau tumbled 97 percent in June. That’s merely the latest in a series of staggering monthly declines proving the special administrative region’s (SAR) gaming-intensive economy remains hamstrung by travel controls implemented in the wake of the coronavirus pandemic.
Making matters worse for Macau concessionaires is that analysts see little visibility as to when the cumbersome border restrictions and quarantine protocols will end.
Visibility on the timing, pace, and scale of the border reopening remains frustratingly low, and this frustration is shared by every operator and junket that we talk to,” said JP Morgan Securities Asia-Pacific team in a research note to clients Wednesday.
That sentiment jibes with commentary from other brokerage firms that recently noted Beijing is unlikely to lift the freeze on issuance of individual visit scheme (IVS) visas this month. IVS is a vital permit used by residents of mainland China to enter the gaming hub.
A recent uptick in coronavirus cases in the Chinese capital stirred speculation policymakers there will be loathe to swiftly unlock the IVS halt. But that’s not the only setback Macau’s gaming and leisure industry recently suffered.
Earlier this week, the Hong Kong governance said it’s extending to Aug. 7 the 14-day quarantine requirement pertaining to visitors to that SAR from Macau, mainland China, and Taiwan. Hong Kong and Macau were working on plans to ease the quarantine policies. But the former’s extension of that plan is a stumbling block to rejuvenating travel between the two SARs.
Travelers going between Hong Kong and Macau face two-week quarantines on both sides of their trips, meaning they’d spend close to a month in sequestration. Currently, the gaming hub isn’t enforcing a seclusion policy on visitors from the mainland. But those tourists face a 14-day quarantine upon returning home.
“Notwithstanding multiple delays and disappointments, we still hope that a ‘Greater Bay travel bubble’ arrangement could be announced soon in coming weeks (if not days). But the devil will be in the details,” notes JP Morgan Securities.
More Glum Forecasts
Some research firms are saying the scant GGR generated in Macau last month was derived from a small number of players – likely high rollers – and that such a scenario creates turbulence in the data points.
June gaming turnover of $89.7 million means Macau concessionaires combined to average nearly $3 million in daily revenue. With operating costs of $2 million to $3 million per day, it’s likely some operators there struggled to break even or lost money last month.
The outlook for the back half of 2020 isn’t too encouraging, either. Deutsche Bank Securities forecast third-quarter Macau GGR of $5.27, while paring its full-year estimate to $16.87 billion from $19.38 billion. Should the bank’s newly reduced projection prove accurate, it’d be less than half the SAR’s full-year 2019 tally.
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