Macau Gaming Income Falls to 18-Month Low on China Lockdowns

(Bloomberg) -- Macau's gaming revenue plunged 56% in March to the lowest level in 18 months, as a worsening Covid-19 outbreak in China battered tourism in the world's largest gambling hub.

Gross gaming revenue was 3.67 billion patacas ($455 million), according to the Gaming Inspection and Coordination Bureau, the lowest since September in 2020. The results were slightly worse than the median analyst estimate of a 55% year-on-year decline and sent down shares of casino operators.

Revenue fell 53% from the previous month, and was down 86% from pre-pandemic levels in 2019.

Key Insights

After a short-lived recovery, Macau's casinos face challenges from the widening virus outbreak in mainland China -- the enclave's biggest source of visitors -- that's led to lockdowns in major cities like Shenzhen and Shanghai. Hong Kong, the second largest contributor to Macau's tourism, has been struggling to contain an outbreak that spiraled into the world's deadliest.
Macau is due to release visitor data later in April. Average daily visitation in the first 16 days of the month was down 23% from February, according to a note by Sanford C. Bernstein analyst Vitaly Umansky. It now requires quarantine for travelers from more than 80 Chinese cities.
The impact of China's virus outbreak on Macau's casinos could last until May, according Bloomberg Intelligence analyst Angela Hanlee. Advance room prices for April at 24 hotels tracked by BI have fallen to the lowest since tracking began in June 2020, indicating operators have low expectations for a rebound in demand, she said.
Uncertainties from China's Covid waves mean Macau may miss out on two major holidays and travel seasons, including the three-day Ching Ming Festival in early April and the five-day Labor Day holiday in early May.
The city's six casino operators have got extra time to prepare for bidding for new gaming licenses, as Macau decided to extend the current ones -- due to expire by June -- to the end of the year.

Market Performance

The Bloomberg Intelligence index of Macau's six casino operators fell 7.6% in March, compared with a 3.2% drop in the benchmark Hang Seng Index.
The BI gauge fell after the release of the March results mid-day Friday, declining 2.2% at 1:43 p.m. local time. Shares of MGM China Holdings Ltd. were down 2.2%, Sands China Ltd. fell 1.6% and SJM Holdings Ltd. slumped 1.3%.