Macau recovery gains momentum as GGR up, travel restrictions down

Macau city

The Chinese New Year (CNY) holiday that just wrapped up may not have brought a lot of great news to Macau, but it looks like to was able to give a much-needed boost. Visitation and hotel occupancies were well below expectations as COVID-19 concerns and travel restrictions continued, preventing Macau from using the annual celebration as a springboard for recovery. However, as CNY started to wind down, things began to improve for the city’s casinos and there could soon be substantially greater growth as coronavirus restrictions are lifted. 

Macau city

Gaming analysts point out that gross gaming revenue (GGR) in Macau picked up at the end of CNY. Both JP Morgan and Sanford C. Bernstein noticed the trend, with JP Morgan analysts pointing out, “Chinese New Year tail-end demand was quite decent. Based on our checks, GGR for the first 21 days of February is estimated at [$725 million] or [$34.5 million] per day, versus [$31.2 million] to [$32.5 million] in recent months.” That growth produced a daily run rate of $58.25 million for the third week of February, which is more than twice what it was during the first two weeks of the month. 

Bernstein analysts’ review of Macau’s performance during February was similar and the brokerage is optimistic about the city’s recovery. The analysts explained in a separate update on Macau, “Macau GGR increased significantly during the third week of February” as a result of an uptick in activity during the last days of the CNY holiday period. Still, they expect full-month GGR for February to be well below where it should be, off by as much as 70% from where it was before COVID-19, but add, “Macau will continue to experience headwinds during the first half of 2021, but we see a strong improvement beginning in the second half as [COVID-19]-related travel constrictions begin to fall away.”

The forecast is backed up by recent developments in the area. China appears to have coronavirus under control in the country, all things considered, and Macau believes the risk of another outbreak is relatively low. Because of this, the city has completely removed its quarantine requirements for all of China, which means all mainlanders are now free to travel to the city. The only stipulation is that they show up at the border with a negative COVID-19 test result and can satisfy certain other minimal requirements.