The impact of Hong Kong’s ongoing civil unrest has had minimal impact on Macau gaming revenues and may in fact benefit Asia’s casino hub in the long-run, according to brokerage Sanford C Bernstein.
In a note examining the reasons behind recent softness in Macau’s gaming industry, analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu reiterated a previously stated view that the Hong Kong protests were not having any material negative impact on its neighbour, stating that incidents “have no doubt caused some transport disruption and created headwinds to visitation into Hong Kong (and onward visitation into Macau), but we believe the impact from the Hong Kong protests has been minor.
“Although visitors from Hong Kong (as defined by travel documents used when entering Macau) make up on average 17% to 19% based on our conversations with casino operators and junkets, Hong Kong residents make up less than 10% of mass GGR. The bulk of mass GGR and almost all VIP GGR is driven by Chinese players.”
Bernstein noted that most high-end players to Macau fly into the SAR directly, with visitors entering via Hong Kong typically low-value grind mass players or non-gaming customers.
However, rather than lose those customers, the protests may instead see mainland Chinese tourists shift their travel plans away from Hong Kong and focus entirely on a trip to Macau.
As a result, “The protests in Hong Kong may help tourism to Macau,” the analysts said.
“The Chinese authorities have created more limitations to visit Hong Kong as a result of the protests and in China sentiment against visiting Hong Kong has been on the rise.
“However, Macau remains disciplined, with no protests and with a pro-China sentiment clearly evident. These factors may help support Macau visitation.”
On the issue of Macau’s declining gaming revenues, Bernstein highlighted multiple more relevant factors at play, namely the US-China trade war, a soft Chinese economy, RMB depreciation, lack of player liquidity, noise around junkets and tightness in hotel room supply.
“While high end has softened, and lower end visitation growth remains solid, average spend per room has declined and with a shortage of rooms, growth under such a scenario becomes more constrained,” the brokerage said.
