Macau Mass, Premium Mass GGR Flirting with Pre-COVID Highs

Posted on: September 4, 2023, 05:19h. 

Last updated on: September 4, 2023, 05:19h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

In further confirmation of Macau’s recovery, gross gaming revenue (GGR) derived from mass market bettors is approaching pre-coronavirus pandemic levels while recent data suggests revenue attributable to premium mass players is exceeding 2019 levels.

Macau recovery
Tourists walk along the Cotai Strip in Macau. Mass and premium mass GGR there is approaching 2019 levels. (Image: New York Times)

As measured by $2.15 billion in GGR, August was the gaming enclave’s best month since prior to the global health crisis with monthly gaming revenue implying a daily run rate that’s 71% of pre-COVID 19 levels. That implies there’s still room for growth.

The print suggests mass GGR recovered to 93 percent to 94 percent of pre-Covid-19 levels versus high-80s [of percent] in the second quarter or low-90s [of percent] in July,” noted JPMorgan analysts in a recent note to clients.

The analysts observed that in August, the GGR rebound rate among bettors in the premium mass category wan 110% ahead of levels seen prior to the pandemic while mass market GGR 75% to 80% of highs notched in 2019. Gaming revenue attributable to VIPs was 28% to 29% of 2019 levels, according to the bank.

Macau on Right Track, Though September to Be Slow

In 2023, the Macau recovery has been sturdy enough that the special administrative region (SAR) reclaimed the throne as the world’s largest casino center by revenue, wresting that title from Las Vegas.

In the first half of this year, Macau’s six concessionaires generated a combined GGR of $10 billion, well ahead of the $7.5 billion notched by Nevada casino operators. A return to pre-pandemic revenue levels is widely expected to arrive next year, indicating Macau’s GGR may lead over Las Vegas will increase. Notably, Macau’s GGR out-performance of Sin City is being accrued without significant contributions from VIPs.

That’s a positive for Macau operators because it implies there’s ample room for upside when it comes to the VIP recovery. That could prove crucial as 2023 comes to an end because September GGR is likely to be slack owing to a brief closure of gaming venues at the hands of Typhoon Saola.

“September GGR isn’t going to wow anyone, not only due to seasonality (a shoulder season between summer holiday and October Golden Week), but also due to super Typhoon Saola,” added the JPMorgan analysts.

Golden Week Outlook

The next significant catalyst for Macau GGR is likely to be the start of Golden Week on Oct. 1. That week-long holiday commences on China’s National Day, which is the country’s final public holiday of the year and one that typically drives an uptick in visits to Macau and Hong Kong.

In normal operating environments, Golden Week is usually a spark for Macau casinos, but forecasting the intensity of related upside is difficult to perform until the holiday arrives.

“Many investors ask, ‘Is there a way to gauge how good (or bad) the Golden Week will be?’ ̇Not really, because of a very short booking window of Chinese travellers (only several days) and an even shorter window for Chinese gamblers,” concluded the JPMorgan analysts.