Macau casinos continue to head in the right direction, for now

Last December, casinos in Macau enjoyed a small boost in activity over what they had reported a month earlier. Gross gaming revenue (GGR) was still way below what everyone wanted, 65.8% lower than it was in December 2019, but was still a 16% month-over-month improvement. Even though 2021 hasn’t gotten off to an overwhelmingly successful start, there is still movement in the right direction, and Macau’s casinos reported GGR that was better than it was last month.

Since February of last year, Macau’s casinos have seen nothing but extremely weak performances, with just a few minor spikes throughout the year. Two consecutive months of improvement can be seen as a small victory for the gambling properties, as well as the city, and January’s GGR was 2.6% better than it was in December. Approximately $1 billion, according to Macau’s Gaming Inspection and Coordination Bureau (DICJ, for its Portuguese acronym), was reported by the city’s casinos.

The uptick isn’t enough to cause massive celebrations, especially since it has already been predicted that the upcoming Chinese New Year (CNY) won’t bring any kind of relief. As COVID-19 continues to find new ways to threaten populations, Macau, as well as other areas, has been forced to tighten travel rules, which is limiting the city’s ability to expand. China, the largest feeder for Macau, has been taking additional measures, as well, and this is impacting any potential exercises to increase visitation to the city.

Based on the figures provided by the DICJ, analysts with the Sanford C. Bernstein brokerage were able to determine who is giving the city the biggest boost. They explained in an update released today, “On a relative basis, premium mass was the best performing segment during the month, while junket VIP was most hamstrung and base mass continued to be hampered by low levels of visitors and Hong Kong travel closure.” They added that January “continued to be negatively impacted by visitation bottlenecks due to visa processing and [COVID-19] test requirements, and by weakness in VIP volumes.”

Over the past two months, Macau’s gambling scene has seen a sequential improvement of just over 18%, which is huge, given the amount of damage caused by the coronavirus pandemic on the city’s revenue channels. While there is still much more to be done and most analysts don’t think a recovery is possible until late this year, at the earliest, positive growth of any kind at this point is welcome. However, if the CNY holiday period is as flat as expected, it’s very likely that a third month of sequential gains won’t be on the table.

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