Macau Casinos Recovering After China Travel Policy Changed
Las Vegas Sands and Wynn Resorts are starting to see recovery in Macau after the China travel quarantine policy was lifted.
While casino operators based in the United States are struggling with the recovery process amidst the COVID-19 pandemic, those offering services in Macau are starting to see a turnaround. The Las Vegas Sands and Wynn Resorts are two companies that offer services in Macau while being based in the US. After the special administrative region decided to stop its current coronavirus quarantine policy towards travelers, it helped to bring in more traffic, which of course, helped revenues to start streaming in.
One sure sign of recovering involves trading. Earlier this week, the Sands China saw trading go as high as 10%. For MGM China and Wynn Macau, the two companies saw double digit increases as the quarantine changes were made.
JPMorgan analysts suggested that the trading increase could be a signal that China is getting more comfortable with easing travel restrictions after Spring Festival and it is a positive note for the market. It is expected that cross-provincial travel restrictions could be removed as well which would help to increase the bottom line of Macau as well.
The decision to remove the health care protocols for visitors from mainland China comes at a time when Macau is starting to see a rebound. The largest casino center in the world relies on travel to be able to stay in business and the COVID-19 pandemic certainly put a stop to services, at least for quite some time.
Visitation to Macau saw a surge during the end of the Chinese Lunar New Year and at this time, analysts started to see encouraging data for recovery. It was estimated that gross gaming revenues came in at $726 million during the first 21 days in February. This amounts to around $35 million a day.
Then, over the past week, the average daily rate was boosted to around $58 million, helped by higher win rates from VIP gamblers and the mass market. It is expected that the high-end player volume will increase from January, by around 5%. This is important to Wynn and Melco as they have a large VIP and premium mass player base.
Analysts of JPMorgan said that it was expected that demand would accelerate but the percentage was higher than expected by analysts and the market.
Mainland China Feeds into Macau
The restriction change involving COVID-19 protocols is a big deal for Macau. The region relies heavily on mainland China for its customers. The market is a vital feeder to the location and the restrictions were keeping the traffic flow into Macau at a low point.
When looking at January totals, just over 556,000 people visited Macau. Of that number, over 496,000 were from the mainland. The majority of the mainland China visitors came in through border crossings. This shows that people are not ready to travel by boat or fly due to the pandemic. So, motor vehicle travel is a must.
Now, Macau is hopeful that the e-visa process will change. The Individual Visit Scheme still faces obstacles as there is an in-person requirement for signing up instead of an online option. People are less likely to use the in-person option due to COVID-19, plus it takes a long time to receive confirmation. If the IVS permit option can be changed back over to online signups, then players can receive approval at a faster pace, which means traveling sooner rather than later.
The coming months should give a better idea as to the full recovery process in Macau. Hopefully, the IVS process will change and players will continue to feel more at ease visiting the SAR for premium casino gaming as time goes by.