Overall visitors to Macau in March drop 14 percent

Monday 27th of April 2015

Overall visits to Macau in March dropped 14 percent year-on-year while visitors from Mainland China fell 18 percent, a reversal of the growth trend seen in January and February, according to official data and analysts.

UBS analysts Anthony Wong and Angus Chan wrote in a note that despite visitation statistics going backwards visitor numbers do not necessarily indicate strong or weak overall gaming demand because gross gaming revenues are usually skewed to reflect high end play. However, there is concern for mid to low end demand in the current situation especially as non-Individual Visit Scheme visits were weak, they added.

“We are concerned that mid/low end demand are also in a cyclical weak spot. Within Chinese visitation, non-IVS visits were weak (-23% in Mar, -12% in Q1), in tandem with anecdotal weak tours stats in HK due to currency/protests/regional competition issues.”

Wong and Chan said that IVS visitations were also lacklustre in March, down 10 percent year-on-year.

“Weak non-baccarat mass revenues also indicate lacklustre demand at low end While weak high end demand is well-documented, we believe the latest visitation and

revenue data reflect lacklustre demand at the mid to low end. We estimate nonbaccarat mass revenue dropped 6% QoQ in Q1 to MOP3.9bn (Figure 5), after dropping

-10% QoQ in Q414 (showing smoking ban impact from Oct).”

The note goes on to say that the analysts believe April daily GGR has been tracking at about MOP640m month-to-date, “on track to reach our full month forecast range at MOP18.1bn-19.8bn, or down 37-42% YoY.”

“We believe there have been little improvements in sequential VIP/mass volumes.”

In a separate note, Union Gaming in response to the latest visitation statistics said mass market spend per visitor was potentially less of a problem than has appeared.

Factoring mass market GGR declining approximately 30 percent in March as visitor numbers dropped, Union said mass market spend is not as bad as recent data would have suggested.

“Taken in the context of a nearly 14% decline in visitation in March, simple math would suggest that mass market spend per visitor is down, but not down as much as recent data would have otherwise suggested.”

Union said that the visitation data will only make the issue more confusing rather than clear.

“As we've been saying for a while, there is as much of a visitation problem as a spending problem on the mass market side of the equation.”

The note says that the level of higher value players is being replaced by lower value players, which is resulting in lower spend per visitor.

“One of the theories we have offered is that many Chinese individuals are opting to take their leisure dollars elsewhere due to improved access (e.g. easier to obtain visas) or favorable currency swings (outbound Chinese visitation growth to places like Korea and Japan is practically stratospheric).”