Citigroup has adjusted its estimate for Macau’s gross gaming revenue (GGR) for September, reducing its forecast from MOP$18.25 billion to MOP$17.75 billion (US$2.21 billion). This change follows a significant 10% decline in GGR during the week from September 9 to 15. According to Citigroup analysts George Choi and Ryan Cheung, Macau’s GGR for the first 15 days of September is now estimated at MOP$8.5 billion (US$1.06 billion), with a daily run rate of MOP$536 million (US$66.8 million) during that period, down from earlier estimates. The analysts attribute the decline to lower-than-expected volumes in both the VIP and mass gaming segments.
Weakening VIP and mass market volumes:
The drop in GGR is largely driven by reduced betting activity in both VIP and mass gaming sectors. As Inside Asian Gaming reports, VIP volumes have reportedly declined by 8% to 10% month-on-month, while mass gaming volumes have dropped by 10% to 12%. Compounding the issue is a lower VIP hold rate, which measures the percentage of total bets that casinos retain as revenue, indicating lower profitability from high-roller betting.
Despite these figures, Citigroup analysts believe the softness could be short-lived. They speculate that some players have delayed their trips to Macau until the Mid-Autumn Festival, which runs from September 15 to 17, potentially boosting GGR later in the month. Nevertheless, the revised forecast represents a cautious outlook for the remainder of September, with Citigroup predicting a daily run rate of MOP$617 million (US$76.9 million) through the rest of the month. The updated forecast still represents a 19% year-on-year improvement over September 2023, returning GGR to approximately 80% of its pre-pandemic levels from 2019.
This latest downgrade is not the first adjustment to Macau’s September GGR forecast. As GGRAsia reports, earlier in the month, Citigroup lowered its initial projection of MOP$18.5 billion to MOP$18.25 billion, citing minor disruptions caused by Typhoon Yagi. The typhoon, which hit the region in early September, caused temporary declines in visitor numbers and gaming volumes. Despite the negative short-term impact, Macau’s GGR has been trending upward throughout 2024, fueled by the return of international tourism and increased activity in the gaming sector.
Looking ahead to October Golden Week:
While September’s GGR may fall short of earlier projections, analysts are optimistic about the upcoming October Golden Week, a major holiday period in China that is expected to drive significant tourism and gaming revenue in Macau. Morgan Stanley Asia Ltd. predicts that during Golden Week, daily GGR could reach as high as MOP$900 million (US$112.1 million), with full-month GGR potentially exceeding MOP$20 billion, according to GGRAsia. If this figure is achieved, it would mark a 1% increase compared to October 2023.
Morgan Stanley’s analysts, Praveen Choudhary and Gareth Leung, believe that mass market gaming during the October holiday could recover to 114% to 115% of 2019 levels, while VIP gaming is expected to remain weaker, recovering to just 23% to 25% of pre-pandemic levels.
The Macao Government Tourism Office (MGTO) is anticipating a surge in visitor arrivals during October’s Golden Week. The director of the MGTO, Maria Helena de Senna Fernandes, has projected that Macau could see 100,000 visitors per day during the holiday period, which runs from October 1 to October 7. However, Morgan Stanley analysts suggest this estimate may be conservative, as Macau saw an average of 118,000 daily visitors in August. Using historical data from 2019, which saw a 20% increase in visitor numbers during Golden Week compared to July and August, the institution estimates that daily visitation could rise to 129,000 during the upcoming holiday.