Macau Casinos Mark 20 Months of Gains in March

Macau Casinos Mark 20 Months of Gains in MarchMacau’s casinos generated gross gaming revenue (GGR) of MOP 25.95 billion ($3.21bn) in March 2018, marking a 6.79% improvement versus the MOP24.30 billion ($3bn) collected the previous month in February. The latest financial results released by Macau’s Gaming Inspection and Coordination Bureau (DICJ) also represents a 22.2% gain compared to the March of last year, in the process beating initial analyst forecasts of between 13 and 18% for the month.

Macau Market

Gambling was introduced to Macau back in 1850 when it was still a Portuguese colony, with sovereignty of the island handed back to the Chinese on 20 December 1999. These days, the autonomous territory is China’s only legal gambling resort, as well as the biggest gambling hub in the world.

At the end of last year, Macau boasted 40 casinos, 22 of which were owned by Sociedade de Jogos de Macau, with other major casino companies including Galaxy Casino (6), Sands China (5), Melco Crown (4), Wynn Resorts (2) and MGM Grand Paradise (1). Together, they then offered a total of 37,000 hotel rooms, in addition to 6,419 table games and 15,622 slots featured on their casino floors.

20 Month of Gains

After reaching a peak in 2013, the Chinese government subsequently launched a widespread anti-corruption campaign which resulted in a severe hit to the industry. It wasn’t until authorities eased off at the end of 2016, however, that Macau’s casino industry returned to double digit growth, with revenues higher by 19% at $33 billion for the whole of 2017. Nevertheless, that figure is still significantly lower than the $45.2 billion collected during its peak year.

In the meantime, March’s revenue strings together 20 consecutive months of gains for Macau, and follows more than two years of declines after which the market returned to growth in August 2016.

March Concerns Unfounded

March’s casino figures exceeded all expectations, with initial slowdown concerns having been related to the National People’s Congress (NPC) meeting that took place from the 5th to 20th of March. Commenting upon how the situation actually played out, Grant Govertsen from Union Gaming noted that the lucrative VIP segment helped lead the revenue rally, and elaborating further stated:

“Even though Chinese New Year was in mid-February this year, the traditional post-CNY slowdown felt notably longer than usual this year and seemingly extended into first two weeks of March. We therefore think GGR sharply accelerated after the meetings were concluded, leading to a very strong last week of March.”

Looking Ahead

Union Gaming further noted that Macau’s casino market has experienced a solid first quarter with GGR expected to climb by 20.5%, with that figure forecast to remain steady for the second quarter of 2018. The brokerage firm further stated that this should be confirmed after the DICJ releases its quarterly metrics in mid-April, and breaking down its forecast, Govertsen said:

“It is likely that the VIP growth rate will continue to outpace the mass/slots growth rate, although mass/slots is likely still growing at least in the teens while VIP is growing in the mid-20% range.”

Looking ahead to the next quarter, Govertsen explained that April was an unfavorable month with one fewer Saturday versus the previous year, while May is neutral, and June advantageous with one extra Saturday. Nevertheless, the analyst said that April should return growth of +21.5%, followed by 18.7% in May, and 20.0% in June. Meanwhile, Brokerage Bernstein has forecast April growth to be slightly less in the mid-to-high teens.

Visitors Up 5.4% in 2017

In 2017, Macau received 32.6 million visitor, up by 5.4% over the previous year, with passenger volume at Macau International Airport reaching a record 7.16 million arrivals and departures. According to Maria Helena de Senna Fernandes, director of the tourism bureau, however, last year’s visitor numbers were rather high, with a conservative estimate for 2018’s growth being between 1 and 3%.

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