Macau had a very difficult January, and February is only looking worse.
The gaming industry in the Chinese Special Administrative Region (SAR) is reeling because of the coronavirus outbreak – a respiratory illness that has infected nearly 20,000 people throughout the country and is responsible for more than 360 deaths. The virus was first identified in Wuhan, Hubei Province, China. The epidemic has led to travel restrictions into Macau.
The coronavirus severely impacted the Chinese New Year, the country’s busiest holiday travel period of the year. The Macau Tourism Office said visitor arrivals plummeted 80 percent during the week.
January gross gaming revenue (GGR) totaled $2.76 billion – an 11.3 percent year-over-year drop. And the odds of a February rebound are long.
2020 is the Year of the Rat, the first of all Zodiac symbols. In Chinese culture, the rodent symbolizes wealth and surplus. But for Macau’s casinos, the first two months of the year have been dreary.
Gaming analysts with Sanford C. Bernstein said in a note Monday that February GGR “could be down 50 to 60 percent, facing a difficult comparison last year that included the Chinese New Year.”
The coronavirus is also expected to hamper casino win. JPMorgan’s note said the market is tough to predict, as there is no word “as to when the visa/travel restrictions will be lifted, let alone the development of the virus outbreak.”
“That said, assuming the visa suspension remains in place, we estimate February GGR could fall roughly by 40 percent to 50 percent year-on-year, which admittedly carries a substantial margin of error,” the JPMorgan analysts stated. “We are not making any changes to full-year estimates, given it is still early days of assessing the novel coronavirus epidemic impact.”
2020 is a Leap Year, as February has 29 days. Despite the extra day, which falls on a Saturday – typically Macau’s busiest day of the week in terms of gambling – the fact that February 2019 included the New Year holiday and was free of a widespread illness is reason for the bleak forecasts.
On Sunday, the Macau government asked the enclave’s six licensed casino operators to open their hotel guestrooms or find other temporary lodging for non-local workers. The Macau Gaming Inspection and Coordination Bureau and Labor Affairs Bureau said the casino companies were receptive to the request that they house their employees who travel to work from outside the SAR.
The goal is to reduce the risk of casino staffers bringing the coronavirus from the mainland into Macau. The initiative is only for essential employees. Non-essential workers are to remain outside the enclave, and should only return to work once the virus is contained.
There are eight confirmed cases of the coronavirus in Macau. There are 51 confirmed cases in nearby Zhuhai, and 17,300 in the mainland.