Macau tipped to return to its revenue peak in 2025

by William Brown Last Updated
Coronavirus outbreak shuts Macau down but casinos remain open

Forecasters have predicted that Macau’s gross gaming revenue will reach all-time highs in 2025.

Inside Asian Gaming reports that by 2025, the gambling mecca’s gross gaming revenue will recover from its coronavirus pandemic-induced slump.

The report, by brokerage Bernstein, focuses on the outlook for Sands China and its parent Las Vegas Sands as key markets recover from the pandemic.

It anticipates a 144 per cent year-on-year increase in gross gaming revenue in 2021, based on easing border restrictions with mainland China.

While that improvement leaves Macau at only around 50 per cent of pre-pandemic levels, Bernstein’s Vitaly Umansky, Kelsey Zhu and Louis Li estimate a recovery to 89 per cent of 2019 gross gaming revenue in 2022, with mass GGR up more than 100 per cent.

VIP is described as a “wildcard” figure, although the analysts say a continued shift from junket VIP to premium mass and premium direct will aid operators by supporting further margin expansion.

Mass-dominated market a positive for Sands China

The analysts suggest Macau’s shift towards a mass-dominated market will benefit Sands China over other operators.

Sands contributed 25 per cent of Macau gross gaming revenue pre-COVID, including 30 per cent of mass.

“Sands China will continue to be the mass market and non-gaming leader in Macau,” they said.

“With the upscaling and expansion of the Macau properties, we believe Sands China will maintain its market leading position in Macau with more than one third of mass GGR and deliver a six per cent increase in earnings before interest, tax, depreciation and amortisation from 2019 to 2025.

“While concession uncertainty remains a key perceived risk factor, we firmly expect Sands to be renewed along with the other five Macau operators.”

Sands China operates The Venetian Macao, The Londoner Macao, The Parisian Macao, Sands Macao and The Plaza Macao.

Bernstein analysts have recently predicted a 50 per cent sequential month-on-month rise in Macau GGR in July after the city reported its lowest revenue of the year in June at US$817 million, due to a COVID-19 outbreak in neighbouring Guangdong Province.

July revenue figures rebound after poor June

In early July, average daily revenue is up 29 per cent compared to June and is 16 per cent better off than the last 10 days of June, when visitation first started to improve.

Average daily revenue is still 64 per cent lower than July 2019, before the pandemic hit.

Bernstein analysts said VIP volume is up 25 per cent month-on-month and mass GGR is between 26 and 28 per cent from June.

The improvement comes after Macau lifted all mandatory hotel quarantine requirements for visitors from Guangdong Province, with only one city in the southwestern Chinese province of Yunnan now subject to quarantine.

The government has also lifted the validity period of COVID-19 tests for those crossing the border into Macau from 48 hours to seven days.

A further uptick in visitation is expected once Macau gives the green light to Hong Kong via a recently announced health code scheme.

The scheme would apply only to visits from Hong Kong and allow those who are vaccinated to skip hotel quarantine requirements.

Anyone displaying a blue code will be allowed to enter Macau’s hotels and resorts although they would be required to remain within designated gaming areas and hotel rooms. 

Bernstein is predicting a near 50 per cent month-on-month improvement by the end of July, with FY2021 GGR tracking for a 144 per cent improvement over 2020 GGR of US$7.57 billion.

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