Analysts: Market ready to put Macau’s 2019 gaming revenue decline in the past Howard Stutz, CDC Gaming Reports · January 2, 2020 at 11:32 am A day after Macau’s casino market reported its first gaming revenue decline since 2016, the investment community was leaving 2019 in the rear-view mirror. Reduced visitation from big spending baccarat players, the ongoing trade war between the U.S. and China, and constant political protests in neighboring Hong Kong all factored 2019’s 3.4% gaming revenue decline. The market saw a gaming revenue increase in only three out the year’s 12 months and December’s 13.7% decline was Macau’s largest single-month plunge since a 16.3% decrease in March 2016. Macau collected roughly $36.5 billion from casino customers in 2019, compared to $37.6 million in 2018. The world’s largest gaming market recorded two consecutive years of gaming revenue increases in 2017 and 2018, which followed a prolonged slump of three years. By Wednesday evening, analysts were considering the market’s prospects for 2020. “Bottom line is that we would expect to witness a pretty muted reaction to the December Macau gross gaming revenue results given expectations around the month were extremely muted,” Stifel Financial gaming analyst Steven Wieczynski wrote in a New Year’s Day research note. “Even with gross gaming coming in below consensus, we don’t believe investors were overly focused on December’s results given the many headwinds the month faced.” Wieczynski said Macau’s casino market could rebound by as much 4% in 2020. “As 2019 drew to a close, we believe the persistent headwinds are easing and could potentially pivot to become tailwinds into 2020,” said Jefferies gaming analyst Andrew Lee. He was hopeful the expected signing of the first phase to end the trade war – scheduled for Jan 15 – will help ease the tensions in the market. “We believe the sector is close to an inflection point with positive drivers,” Lee said. Chinese President Xi Jinping visited Macau in December to mark 20 years under Chinese rule. A Reuters report before the visit cited potential policy announcements related to Macau, such as China creating a financial hub in the Special Administrative Region to offset the political issues in Hong Kong. None were announced during Xi’s visit. “Macau’s new chief executive acknowledged these polices were ‘not ready yet’ while there was no expectation for Beijing to allocate land to Macau for the ‘near future,’” Macquarie Securities gaming analyst Edward Engel told investors. Las Vegas Sands, Wynn Resorts and MGM Resorts International all operate casinos in Macau. Sands is spending $2 billion over the next two years on renovating and enhancing its Macau properties, primarily on rebranding the Sands Cotai Central into The Londoner Macau, a $1.35 billion London-themed resort. Wynn Resorts is also spending $2 billion in Macau to add non-gaming enhancements to a site near the Wynn Palace, including two new hotel towers totaling 1,300 rooms and the Crystal Pavilion complex, which will include an art museum, gardens, an entertainment theater and food and dining venues. Nomura Instinet gaming analyst Harry Curtis the Nevada companies could benefit from potential catalysts in Macau, including the start of a new Henquin rail spur and light rail system and a stabilizing economy in China. Also, Macau is expected to provide clarity on the potential re-licensing process. “A black swan positive would be initial indications from Macau’s new government on reasonable steps license holders need take to retain their concessions,” Curtis told investors. Engel said the focus for the casino market now is on Chinese New Year, which begins Jan 25 and lasts through Feb 8. Because the 15-day holiday is over two months, the usually high gaming revenue figures during the period could be skewed. “The official public holiday is from Jan. 24 to Jan. 30, which entitles mainlanders to seven days of absence from work,” Engel said. “In 2019, the entire holiday occurred in February.” Macau casino operators are already expecting a lull in gaming revenue during the first three weeks of January ahead of the New Year holiday. “While we expect visitation to spike in the last week of January, VIPs and premium mass (market customers) will likely wait until the week after to avoid the crowds,” Engel wrote. “This pushes the more important component of Chinese New Year into February.” Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.