Macau Casino Rebound Shows Travel Is Bright Spot Amid China’s Woes

2023-09-01 14:22

Macau’s casino recovery is sustaining momentum, with gaming revenue in August rising 686% from a year earlier to

Macau’s casino recovery is sustaining momentum, with gaming revenue in August rising 686% from a year earlier to the highest since January 2020, adding to signs that spending on travel and experiences is weathering consumer concerns about China’s economic slowdown.

Gross gaming revenue reached 17.2 billion patacas ($2.1 billion), according to data released by the Gaming Inspection and Coordination Bureau. The result beats the median analyst estimate of a 678% increase, and has returned to 71% of the 2019 levels.

Key Insights

Macau’s gaming industry has been buoyed by the summer holiday season and strong demand for leisure activities among Chinese consumers, who make up the bulk of the gambling hub’s visitors.
- The city reported 2.8 million visitor arrivals in July, which has returned to 78% of pre-pandemic levels, according to the latest official data. Macau will report August figures later in the month.
- Casinos haven’t seen any impact from China’s economic slowdown, because the richest 1% of the country’s residents are still traveling and spending on entertainment as usual, Morgan Stanley analysts including Praveen Choudhary wrote in a report, citing operators.
Casino operators are cautious about September, with gaming revenue typically falling 9% month-on-month following the summer-break boost, according to Morgan Stanley.
Macau’s six casino operators bounced back strongly from last year’s Covid lows and their combined profit of $1.7 billion in the second quarter was 68% of the 2019 levels. But the second half of the year will test the industry’s resilience as China’s economic uncertainties endure, while the resumption of group tours to a raft of countries may also mean Macau faces competition in enticing visitors.
Macau has been pushing to diversify its economy away from gambling, and the casino sector is reducing its reliance on high rollers from mainland China after Beijing cracked down on capital outflows. Casino operators have committed at least $13 billion over the coming decade to develop non-gaming industries, and have been hosting more concerts and conferences this year to draw in more mass market tourists and business visitors.

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