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Macau visitors up in CNY, but no effect on gambling revenue

Macau visitor numbers rose 4.7 percent over the Chinese New Year holiday, but the increase had no major impact on gross gambling revenue, according to Wells Fargo analysts. 

According to data from the Macau Government Tourism Office, more than 793,500 of the visitors came from mainland China,.

However, Wells Fargo Securities said the increase in visitors did not translate into higher gaming revenue for the city. “Despite strong preliminary visitation figures, our latest channel checks suggest mass tables remain quiet. In particular, we’re hearing this Chinese New Year is notable for the number of (middle class) families present in Macau, and their higher propensity to enjoy non-gaming amenities and lower propensity to gamble,” said analysts from Wells Fargo.

According to the firm, ADR for the month is estimated at MOP 580 million (US$72.5 million) for February, and thus revenues are expected to be down 12 to 16 percent.

However, Wells Fargo sees a potential rebound for Macau in the near term following China’s foreign currency reserve posting drops in January.
“China reported foreign currency reserve holdings of $3.2 trillion in January… marking the lowest level of reserve holdings in almost 4 years. Given the strong correlation between bank reserves and both VIP (74% correlation) and Mass (62% correlation) revenues, the latest drop in reserves could be another indication that Macau revenues are likely to spring back in the near-term.”

According to Bernstein, which estimates Macau's gross gaming revenue for the first 14 days in February at MOP 8.8 billion, implying an ADR (average daily rate) of MOP 628 million, GGR was not as strong as expected, given it includes the Chinese New Year Week.  However,  Bernstein believes “the larger tourism arrivals in Macau reflect favorably on Macau's focus to diversify its economy and develop itself into a destination market.  It would also bode well for Macau gaming’s paradigm shift that is increasingly driven by Mass over the long run.”

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