Chinese New Year Sets Macau's Visitation Record

Macau’s Public Security Police have released preliminary figures stating that 1.21 million visitors arrived to Asia’s largest gambling enclave during the seven-day Chinese New Year holiday period, between February 4th and 10th.

That’s a year-on-year increase of 26.6% and the first time ever the number of tourists ed the one million mark. The Macao Government Tourism Office reported this stat this past Monday.

Mild Growth in Casino Revenue is Expected

The reports also suggest, however…

…that casino gross gaming revenue did not grow exponentially, following the tourist influx. In fact, authorities estimate that GGR for February could modestly rise between 2 and 5 percent compared to same period last year.

Analysts, Vitaly Umansky, Eunice Lee and Kelsey Zhu quoted unofficial industry channels’ data and said that average daily rate for the period between February 1st and 10th was circa $103.9.

They added: “Month-to-date mass GGR is estimated to be up modestly by low-single digits of percent month on month, whereas VIP volume is up high-single digits of percent month-on-month.”

Correlation Between Visits and Spending Does Not Exist

The three analysts explained that, despite hefty visitation, high rollers have traditionally kept away from Macau casinos at this time of year. Stronger high-end play is expected for the second half of February.

Various other experts on the matter have warned that there is no necessary correlation between the number of tourists and spending in casinos. Director of the Macao Government Tourism Office, Maria Helena de Senna Fernandes, noted that Chinese New Year visitation figures were way above what tourism officials expected (8-9% rise, as opposed to 26.6%).

74.1% of total visits (approximately 899,000) came from mainland China (a 25.6% leap for this particular demographic).

A Calm After the Storm

After a substantial 14% jump in annual income for 2018, this year’s forecasts claim that a deceleration is in order for the world’s biggest gambling spot.

Top-tier financial companies such as Morgan Stanley are quite pessimistic with their predictions…

…they expect a 2% year-on-year decline and the first negative result since 2015. They argue that license renewal will keep valuation multiples lower than long-term averages.

“While we remain bullish on the prospects for all six concessionaires to keep their licenses, the market may continue to fear the unknown. Worse still, any licensing decisions may not be made until 2021 (after extending SJM/MGM for two years).”

Others, like JP Morgan, are not that gloomy. They say that Macau gambling will still be on the rise, albeit somewhat more modest than last year’s, with below 10 percent.

Source:

“Macau Chinese New Year arrivals hit record 1.2mln, up 27pct”, ggrasia.com, February 11, 2019.