Macau may not recover until Q3, 2020: Analysts

macau-may-not-recover-until-q3-2020-analysts

The coronavirus has had a significant impact on Macau. With gaming revenues plummeting in February, everyone has to be wondering when the territory’s luck will change.

macau-may-not-recover-until-q3-2020-analystsRight now, everything depends on when travel restrictions are lifted. This, of course, depends upon how quickly the Chinese government is able to slow the spread of the Covid-19 outbreak. But even with that, it may take some time before tourists are comfortable with taveling again. Analysts are now suggesting it may not be until later in 2020 that confidence returns.

“Assuming the epidemic peaks in the next two months, we might see a recovery in Q3/4,“ IGamiX Management & Consulting’s Ben Lee told the Macau News Agency. “The underlying manufacturing sector in Guangdong province is fragile and will need to recover before we can start to see the players returning to play over more.”

Others point out that it will be the degree of tourism and transportation that is the biggest indicator of success. Once people feel more comfortable about returning to Macau, and with traveling in general, then there should be a dramatic upswing in revenue. Sanford C. Bernstein predicted a “solid recovery in Macau,” driven by pent up demand.

The question is, when will this occur? The outbreak has led Chinese authorities to stop all travel groups from being issued visas to visit either Macau or Hong Kong.

“Hong Kong visitation will remain low due to fear of contamination and suspended/reduced ferry services and international travel will be highly curtailed due to the major flight cancellations until March 31. So, visitor numbers will be very low for March, with a slight increase over February,” explained Niall Murray, chairman of consulting company Murray International.

The loss of revenue has been catastrophic. A 15-day casino shutdown was ordered to protect employees and reduce a potential spread of the virus. Total casino revenue generated for the month was just MOP3.1 billion ($386.6 million), an 87.8% reduction from February 2019. Total revenue for the casinos is also down by nearly half through the first two months of this 2020.

To this point, it is reported that 2,943 people have died in mainland China from the virus and there are over 89,000 reported cases world wide, with over 80,000 in China alone.