A tough year for Macau

According to figures released by Macau’s Gaming Inspection and Coordination Bureau (DICJ), last year Macau posted its lowest annual gaming revenue since 2010.

December was the 15th month in a row in which revenue was down on the previous year

In 2020, Macau saw gaming revenue decline 79% year-on-year. The region’s 41 casinos generated a total of $7.57bn in the 12 months. With a total of $979.5m, December was the 15th month in a row in which revenue was down year-on-year. The year’s steepest monthly decline came in June when revenue fell 97% from 2019 levels. For Q4 2020, revenue fell by 70%.

Authorities closed Macau’s casinos for two weeks in February to limit the spread of COVID-19. Since then, casinos have struggled with travel limitations and the closing of the region’s borders. Although August saw the resumption of tourist visas between Macau and Hong Kong, visitor numbers have remained low.

VIP gaming takes the hit

Because of limits imposed by the pandemic, VIP gaming has seen a substantial decline in Macau. According to JP Morgan analysts DS Kim and Derek Choi, mass market share reached the “highest level on record” in the fourth quarter of 2020.

In a note published Monday, the analysts calculated VIP gaming fell 80% year-on-year for Q4 2020. In contrast, gross gaming revenue in all other segments was down 63%. For the last month of the year, VIP revenue fell between 75% and 80%. Mass market gaming dropped by 60% during the same month.

Despite a decline in VIP revenue, Kim and Choi argue the increase in mass market share is positive for Macau’s operators. The region’s casinos “should print positive EBITDA at this level thanks to higher mass mix and relatively resilient non-gaming (retail rent), as well as cost rationalization,” observed the analysts. 

The road to recovery

In August, JP Morgan predicted the Macau market would begin its road to recovery that month, anticipating positive EBITDA for the region’s operators from October onwards. Furthermore, analysts predicted gaming revenue would reach 85% of 2019 levels in the first quarter of 2021, finally hitting 100% in Q3 this year.

Macau’s casino operators have struggled to reach positive EBITDA since then. However, there have been some signs of recovery. In October and November 2020, the Studio City casino resort in Macau saw revenue increase 146% compared to the entire third quarter.

In December, analysts for Bernstein Research said they expect Macau visitor figures to gradually rise. For now, authorities have closed the border between Macau and Hong Kong while the country faces its fourth wave of coronavirus. However, the Macau government said it will permit the nation’s residents to return to Macau once it has confirmed no COVID-19 transmissions for 14 days.