Headwinds from the China-U.S. trade war and protests in nearby Hong Kong continued to hamper Macau’s casino market.
The Chinese gambling enclave is headed toward its first annual decline since 2016 after November resulted in an 8.5% revenue slide. As Jefferies’ Hong Kong-based gaming analyst Andrew Lee put it, Macau is “unlikely to see a Christmas surprise.”
Macau’s Gaming Inspection and Coordination Bureau said Sunday casinos collected $2.8 billion from gamblers during the month. Although the decline was better than analyst expectations of a 10%-13% drop, the figure marked the second weakest month of the year. In August, Macau gaming revenue fell 8.6%.
For the first 11 months of 2019, gaming revenue is down 2.4% to $33.7 billion. Barring an exceptional December, Macau won’t match last year’s $37.6 billion total. Macau recorded two consecutive years of gaming revenue increases in 2017 and 2018, which followed a prolonged slump of three years.
Chinese President Xi Jinping is due to visit Macau in December to mark 20 years under Chinese rule, but most analysts believe a visit by the leader often leads to reduced gaming revenues because high rollers avoid the region and the government often tightens visa policy.
Meanwhile, protests in Hong Kong over government policy have disrupted transportation and have slowed travel into the region. Previously, analysts and Macau casino executives have said the protests had minimal impact on gaming revenues.
Many analysts wrote off 2019 and are focused on 2020.
Lee, in a note to investors, said Hong Kong impact is becoming an issue for Macau’s non-Guangdong visitation due to high-end business trip cancelations.
“December gross gaming revenue and visitation could also be under pressure given potential China visa restrictions as Macau’s new Chief Executive officially takes office Dec. 20,” Lee said.
Stifel Financial gaming analyst Steven Wieczynski told investors Macau revenues in December 2018 rose 17% compared to the previous year. He wouldn’t be surprised to see in decline of 10% to 12% during the month.
“December is going to be a mess of a month, not only because it’s going up against a 17% comparison, but also because visa restrictions will weigh on VIP/premium visitation around Macau’s 20th anniversary celebration,” Wieczynski said.
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.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
