Supplier News
China – Pace of decline improves in Macau’s 17th straight month of drop
By Phil - 2 November 2015
Macau’s 17th consecutive month of revenue decline was tinged with the tiniest silver lining of hope with gaming revenues falling at the slowest pace since January.
GGR declined by 28.4 per cent year-on-year to 20.1bn patacas ($2.5bn) in October, representing the slowest decline since January, when GGR dropped by 17.4 per cent. It is also only the second time the decline has been less than 30 per cent year-on-year. So far in 2015, GGR has dropped by 35.5 per cent.
Vitaly Umansky, a gaming analyst at Sanford C. Bernstein, said: “The figure can be viewed as the beginning of a ‘less bad environment.”
Nomura analysts said: “Macau is not out of the woods yet, especially VIP gaming, as we expect Macau to experience three consecutive years of falling gross gaming revenue.”
Nomura predicts that GGR will drop by 35 per cent in 2015 with a drop of another eight per cent in 2016.
Figures for October would have been boosted by increased visitation driven by China’s National Day holiday, and the opening of Melco Crown’s $3.2bn Studio City resort.
Galaxy Entertainment gained a four per cent increase in market share, accounting for 25.7 per cent of the revenues. Sands increase by three per cent taking it to 23 per cent.
The fall came despite more people visiting Macau from the mainland in October compared to a year ago. Chinese visitor arrivals during the October 1-7 National Day break increased by 7.1 per cent from a year earlier whilst visitation figures for the whole month were up by 17 per cent. Deutsche Bank analyst Karen Tang highlighted that GGR over the National Day break was 914m patacas a day, 65 per cent higher than the daily takings in September.
Another beacon of hope is that Macau’s transit visa scheme ‘is set to undergo a significant positive shift at year end,’ according to Union Gaming Securities Asia.
Union Gaming analyst Grant Govertsen explained: “Persons entering Macau for the purposes of transiting to a third party country would be allowed to stay for up to 14 days (from 7) upon one’s first entry into Macau during any given month, and would then be allowed to stay up to 7 days (from 2) for a second entry during the same month. Keep in mind that it was just four months ago that the transit visa restrictions were unwound after being in place for exactly one year (5 days + 1 reverted back to 7+ 2). We had speculated that the most likely course of action would come in the form of relaxed visas. Regardless, should we receive official confirmation that the transit visas are being relaxed again, we would take this as further evidence that Macau’s darkest hour could be behind us as the government begins to take corrective actions.
“We believe the greatest beneficiaries of a relaxed transit visa scheme are those persons who facilitate VIP gambling (junket agents) and to a lesser extent premium mass players themselves. It is important to keep in mind that the relaxation of transit visas are unlikely to result in a sharp immediate increase in GGR,” he added.
