Macau Revenues Surge Following China’s Reopening
As anticipated, the casino gross gaming revenues collected across the Macau sector surged in January, up an enormous 82% compared to January 2022. The sector had been provided with a regulatory and political blessing which saw China shift away from its strict stance towards international travel – a move that has enabled vast amounts of overseas tourists to access the city again for the first time in nearly three years.
Macau has been given the green light to re-open its borders and its leading to a cash windfall the city could not have wished to come any sooner.
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There is a lot of optimism swirling in Macau these days. The embattled region has been subject to radical lockdown protocols since the outbreak of the pandemic and suffered tremendous financial consequences as a result. For a city so dependent on the footfall of foreign customers for its survival, the grand reopening of China combined with a week-long Lunar New Year break has been the perfect catalyst to reignite the industry.
Putting this into context, the sector has experienced nearly double the gross gaming revenues that it recorded in the same month last year in 2022. An epic 82.5% rise from last year’s revenue has convinced investors around the world that Macau has finally shaken off the fatigue of its Covid hangover, and the zero international travel that this period of uncertainty inflicted upon the sector.
The performance for January 2023 has surprised a lot of analysts, many of whom had naturally anticipated a sharp increase in financial performance, but not one as profound. Many firms had drawn up Macau to do revenues of approximately 40% better YoY, and the actual figures are more than double that. This stellar performance will go down as the largest generation of revenue since January 2020.
Recovery Comes at Just the Right Time
After enduring a series of setbacks that lasted for 10 consecutive months, the region is now showing signs of revival. The prolonged slump was attributed to the implementation of Covid Zero measures and the enforcement of stricter regulations on gambling across borders, which caused most casinos to operate with little to no patrons in 2022.
Macau has been on the rocks for some time, vying to ignite a recovery but failing to find the freedom to operate across the strictness of Chinese regulatory crackdowns. With these limitations, finding flexibility to grow their brands and build up a strong pipeline of commercial deals hasn’t been easy. But with the chips falling at just the right time in China, the industry looks set to rebound. The exceptional level of demand behind gambling in Macau during the Chinese New Year has caused surprise amongst analysts in the region. The pace and quality of this recovery has raised spirits across the industry.
The enterprise pressure on Macau’s business has been immense throughout the COVID period, and now with the worst financial onslaught behind them, the companies ruling these markets are dusting themselves off and preparing to capitalize on the resurgence in the casino industry. With the shackles now removed and foreign tourists flooding back into the city, it’s a great time to hold a Macau casino license.
Trends and Impact of Macau Re-opening on the Markets
According to analysts, the gaming industry is expected to see substantial growth this year. In the latest median forecast, experts predict that gaming revenue will grow by 222%, compared to last month’s estimate of 195%. While the Lunar New Year travel surge has been a positive development for the sector, it remains uncertain whether the industry will be able to maintain such a rapid pace of growth for the remainder of the year.
The Macau government has recently increased scrutiny of its casinos as part of Beijing’s efforts to shift the city’s focus away from gambling and towards other sectors. Additionally, there has been a crackdown on VIP gambling that used to dominate the industry. Although daily gaming revenue has recovered to around 60% of pre-Covid levels during the peak holiday season, analysts have cautioned that this rate of recovery may not be sustainable.
The absence of Covid testing requirements in Macau, as opposed to Hong Kong, and the limited international flight options on the mainland may be drawing more visitors to the city. However, pent-up demand from Hong Kong residents may subside in time. Despite these challenges, Macau casino operators have performed well. A Bloomberg Intelligence index of these operators rose over 3% after the latest data, and the index increased by 7.9% in January, outpacing the Hang Seng Index’s rise of 10.4% during the same month.
