Macau reported on Wednesday its highest monthly gaming revenue in three years and an 82.5 percent increase from last year, according to the region’s Gaming Inspection and Coordination Bureau.
The bureau said Macau’s 39 casinos took in $1.43 billion (US) in January, the highest amount since January 2020, when the COVID-19 pandemic soon caused the region’s casinos to close for 15 days .
In January 2020, the bureau reported revenue of $2.74 billion. Since then, China’s central government has imposed lockdown restrictions and border closures that have prevented tourists from visiting Macau and monthly revenue fell to $49 million in July.
Las Vegas-based gaming industry analyst John DeCree of CBRE Equity Research characterized the developments of recent months as the luck of the Year of the Rabbit.
“January’s GGR (gross gaming revenue) marked a 52% recovery over January 2020 and a 46% recovery over January 2019, helped in part by the timing of Chinese New Year, which led to a significant recovery in volumes,” DeCree said in a report to investors.
“However, travel restrictions were not lifted until January 8, suggesting that the daily rate of movement is tracking even higher than suggested by the overall monthly results,” he said. “Given the lack of junket and VIP play in the market, it is likely that the higher margin mass market segment has recovered significantly beyond the overall GGR recovery of 52 percent, perhaps in the 70 percent range.”
Abolition of junkets and some VIP arrangements were among the new conditions imposed by the government on the renewal of the licenses of six companies. Government leaders feared that group travel operations were linked to organized crime in Macau.
Significance for Las Vegas
The recovery in Macau is particularly important for three Las Vegas companies: Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Resorts International. The companies recently signed a 10-year license extension that requires them to invest billions of dollars in non-gaming amenities there. Macau’s revenue accounts for up to about 60 percent of the total revenue collected by these companies.
“In addition to the initial acceleration of recovery in Macau, both LVS (Sands) and Wynn are benefiting from ongoing recovery trends in other markets, namely Singapore for LVS and Las Vegas for Wynn,” DeCree said.
Ferry and bus services between Macau and Hong Kong resumed for the first time in nearly three years last month, and the number of Lunar New Year visitors reached 451,057 during the seven-day Golden Week holiday – the traditional start to Lunar New Year celebrations – according to the Macau Government tourism office. That’s a nearly 300 percent increase over Lunar New Year 2022, though it’s still only 37.5 percent of the 2.21 million visitors during 2019’s Golden Week.
Analysts say the region appears to be experiencing the same pent-up demand that Las Vegas is experiencing in its recovery.
Room rates are refundable
For the Lunar New Year, which began on Jan. 22, average daily hotel room rates rose 50 percent year-over-year to $195 per night, an 82 percent increase over 2019.
Occupancy averaged 85.7 percent for the week, up 22.4 percentage points from the same week last year, but below the 97.6 percent occupancy during the 2019 holiday.
Hotels reported an average occupancy of 92.1 percent on the fourth day of the holiday, the highest daily average for the week this year.
“While it is too early to say whether GGR may exceed 2019 levels any time soon given the significant contraction in the VIP business, the pace of mass market recovery is nevertheless encouraging and points to a sharper than expected recovery in profitability before,” DeCree said.
On Sands’ earnings call last week, company executives said they were encouraged by what they were seeing in the Macau market.
MGM and Wynn call fourth-quarter earnings later this month.
The Review-Journal is owned by the Adelson family, including Dr. Miriam Adelson, majority shareholder of Las Vegas Sands Corp., and Las Vegas Sands President and Chief Operating Officer Patrick Dumont.
Contact Richard N. Velotta at [email protected] or 702-477-3893. I follow @RickVelotta on Twitter.