After the exuberance of the National Day Golden Week, Macau’s casinos witnessed a substantial decrease in daily gross gaming revenues (GGR). During the third week of October, the daily GGR plummeted to approximately MOP$514 million (US$64.1 million), marking a stark decrease from the MOP$846 million (US$106 million) reported in the earlier part of the month. This decline, while anticipated by market analysts, underscores the cyclical nature of the gaming industry in response to significant holiday periods.
A significant drop in gaming revenue following Golden Week celebrations:
“Macau’s gross gaming revenues fell by an estimated 39% to around MOP$514 million (US$64.1 million) per day in the week to 20 October, down from MOP$846 million (US$106 million) per day during the first two weeks of the month,” as noted by JP Morgan analysts in their recent review.
As Inside Asian Gaming reports, from the onset of the month until October 20, the total GGR recorded was MOP$14.6 billion (US$1.82 billion), translating to an average daily rate of MOP$730 million (US$91.1 million). Forecasts now suggest that October’s total GGR could surpass MOP$21 billion (US$2.62 billion), indicating a modest but noteworthy improvement over the initially expected MOP$20 billion. This figure suggests a resilient market that has managed to exceed expectations, offering some optimism about the underlying demand strength as the fourth quarter of 2024 progresses.
The data from JP Morgan indicates a robust recovery trajectory within Macau’s mass gaming sector, achieving 110% to 115% of its pre-pandemic operational level. Conversely, the VIP sectors have shown a slower recovery, currently standing at about 25% of pre-COVID levels. Despite this disparity, the current recovery rates are showing improvements over the third-quarter figures, where mass gaming was between 105% to 110% and VIP gaming hovered around 23% to 25% compared to their status before the pandemic.
Analysts urge caution against overly optimistic quarterly projections: “We may not extrapolate this for a full quarter as the [GGR] figure was boosted by a very strong [October] Golden Week…but it is encouraging to see that the recovery rate is rebounding so far after two quarters of sequential pull-back,” the JP Morgan team wrote in its Monday memo.
Implications for investors as earnings season approaches:
As the earnings season approaches, spearheaded by Las Vegas Sands this Thursday, all eyes are on the sustainability of this recovery momentum. The forthcoming financial disclosures are eagerly awaited by investors who are looking to gauge the long-term viability of the market’s resurgence, particularly in light of recent economic stimulus measures introduced by the Chinese government.
The overall performance of Macau’s gaming sector in this quarter will significantly influence investor sentiment and could potentially signal a turning point in the demand dynamics for one of the world’s most lucrative gaming markets.
