Macau enjoyed record-breaking visitation during the Lunar New Year holiday in February, with an estimated 800,000 visitors crowding its borders and airports. Yet the gaming industry’s historic decline has only deepened.
Year-on-year gross gaming revenues dropped a startling 48.6 percent to 19.54 billion patacas (US$2.4 billion) for February, the ninth straight month of decline in the world’s leading gaming destination.
Accumulated gross revenue for the year so far is 43.29 billion patacas (US$5.41 billion), down more than 35 percent from the 66.74 billion patacas (US$8.35 billion) generated during the same period last year.
The drop was not as sharp as some expected, however; eight analysts surveyed by Bloomberg News had predicted revenues could fall off as much as 54 percent.
Macau’s unprecedented slump began last summer when the government of Chinese President Xi Jinping started cracking down on graft and money laundering. The high-profile campaign scared off high rollers who once were responsible for up to 60 percent of gross gaming revenue in the city. The slide continued as China enacted new restrictions on visas and smoking, measures that discouraged mass-market gamblers.
To make matters worse, mainstream tourists are spending less, to the detriment of the city’s restaurants, retail malls and hotels. Shopping by Chinese tourists dropped 32.8 percent to 1,079 patacas in the fourth quarter of 2014, according to data reported by Bloomberg. Hotel occupancy during Golden Week fell 6.9 percent and average room rates declined 15.4 percent, said the Macau Government Tourist Office.
According to the Macau Daily Times, the slump is expected to continue. “The Chinese government is determined to pursue its anti-corruption drive,” said Daphne Roth, head of Asian equity research at ABN Amro Private Banking, “and that’s negative on the casino stocks.”
But some observers believe the industry in Macau will start to rebound in the third and fourth quarters. “There is a good case for a recovery later in the year,” said Tim Craighead, a Bloomberg Intelligence analyst in Hong Kong. “The launch of new resorts that attract mass-market gamblers, and easier comparisons” from the year-earlier period would also ease the pain.