Macau Poised to Post 80 Percent Revenue Reduction

Image by Macau Photo Agency
Article by : Helen Dec 30, 2020

The global COVID-19 pandemic is putting a massive strain on Macau gaming revenues and likely will inflict an about 80 percent drop in annual revenues. Macau gaming would love to end the year on a positive note, but good news likely will not come until the Chinese New Year celebrations begin in early 2021.

That money will ensure they can outlast the global pandemic that generally left Macau untouched in every way except economically. That economic damage is significant in the short run. Macau posted monthly revenue drops of nearly 97 percent in April and stayed above 90 percent through September. Annual revenues were down more than 82 percent in September.

A mild gain as reduced monthly revenue drops to 72.5 percent in October and 70.5 percent in November. Meanwhile, the annual revenue variance dropped slightly to 80.5 percent in November. The average daily rate for gaming revenues recently exceeded $32 million, but analysts say the Macau gaming industry likely will post an about 80 percent decline in revenues for the year.

About the best news for Macau gaming in 2020 is that its casinos entered the year with about $12 billion in cash reserves. [General gaming] That much in reserve combined with relatively low debt obligations ensures the Macau gaming industry will survive the global COVID-19 pandemic. When COVID-19 vaccines currently approved in the United States and set for distribution are circulated, the global pandemic could be nearly over.

When full travels are in place between China and Macau, the revenue picture should look much better for 2021 when compared to 2020. That should be especially true for the summer months that saw a nearly complete collapse in gaming revenues in 2020. A resumption of full-scale developments of new gaming properties planned for Macau also should improve the local economy when the pandemic crisis is finished.

Only 46 cases of COVID-9 were reported in Macau so far, with no deaths and full recoveries. The pandemic generally is sourced in China, which locked down early and reports a virtually full recovery from the COVID-19 crisis. About 90 percent of Macau’s gaming business comes from visitors from China, and the annual Chinese New Year is slated to start in February. Barring a sudden surge in COVID-19 cases in China, odds are the annual revenues will look much better in February.

While the pandemic continues, Macau has instituted a travel policy that essentially bans visitation from high-risk locales. Nations that report no COVID-19 cases for at least 14 consecutive days will have no travel restrictions from the Macau government. Macau banned all visitation from foreigners in March but has relaxed the restrictions slightly.

Tourists from Mainland China are welcome to arrive without going into quarantine for 14 days when they have certificates affirming they tested negative on a nucleic acid test. Citizens of Hong Kong and Taiwan can come to Macau but must quarantine for 14 days first.

Anyone else wanting to come to Macau must apply for special permission based on special circumstances that make the visit essential. That includes those holding teaching or professional positions in Macau or those who want to visit with family living in Macau. To do that, they must undergo a 14-day quarantine in China prior to entering Macau.

Some locales earn automatic denials for requests to enter, including anyone located in the United States or Europe. That is especially true with COVID-19 rates surging in the United States and a mutant strain reported in the UK. The UK recently initiated a region-wide lockdown in the greater London area while many parts of the United States are under lockdown orders.

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