Macau casino revenue sinks to levels not seen since 2010

TAGs: Macau

macau-casino-revenue-declineAs predicted, casino gaming revenue in Macau in the month of June hit a low not seen in nearly five years.

According to figures released on Wednesday by Macau’s Gaming Inspection and Coordination Bureau (DICJ), June’s gaming revenue total slipped to MOP 17.4b (US $2.2b). The figure represents a 36.2% year-on-year decline and the lowest monthly total since November 2010.

The decline was slightly better than both analysts and the local government had predicted. While June’s decline extended Macau’s revenue losing streak to 13 months, the rate of decline has slowed each month since February’s record 48.6% shortfall. Still, for the year to date, Macau’s numbers are down 37% from the same period last year.

Macau casino stocks have been on the rebound for the past couple days after word spread that Beijing was relaxing its restrictions on Chinese citizens’ travel to Macau. On Monday, the Xinhua news agency reported that Chinese passport holders traveling through Macau to a secondary destination could now stay in Macau for a full week rather than the previous limit of five days. These visitors can also make two stops in Macau within 30 days rather than 60 days.

The changes reverse the limits that were imposed last year, before Macau’s revenue slide began in earnest. UBS Securities analyst Anthony Wong issued a note saying Beijing may have decided to loosen the visa noose after determining that Macau’s falling casino numbers had sunk to a level where “the government feels a need to act to support it from falling further.”

Macau’s number of hotel guests fell 2.7% in May, while the number of visitors from mainland China – who made up 63% of May’s visitors – fell 4.2%. For the year to date, the number of visitors is down 8.8%. The average length of stay in May was unchanged at 1.4 nights but the overall occupancy rate fell 6.6 points to 78.9%, well off the 90% peak set last year.

Analysts have reported that some Macau operators are currently offering room rates that are half the going rate before Macau’s slide began. With a raft of new mega-resorts set to open on Cotai in the next couple years, the number of available rooms will dramatically expand and will likely create further downward pressure on room rates.

With visitor ranks thinning, casino operators are being forced to work harder. A Deutsche Bank study of Wynn Macau, Sands China and Melco Crown Entertainment numbers showed that while mass market revenues had fallen 20% in the past 12 months, promotional budgets fell just 6% over the same span.


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