Macau GGR Forecast Upgraded for 2023 Despite Tourist Drop

Summary:

• Analysts at Citigroup said Macau’s gaming industry is recovering better than expected
• The firm boosted its 2023 GGR outlook for Macau by 13 percent to MOP179.4 billion
• This is despite the drop in overall visitation

Macau’s casino industry is bouncing back despite a rise of crime after the lifting of COVID-19 restrictions earlier this year, with the strong recovery mainly driven by the mass segment.

Given the current upward pattern in gross gaming revenue (GGR), investment bank and financial services firm Citigroup is now predicting Macau’s full-year 2023 GGR to reach MOP179.4 billion (US$22.25 billion), up 13 percent from its previous forecast. The latest estimate translates to around 61 percent of 2019 levels.

Drop In Tour Visitors Won’t Affect Macau’s Gaming Recovery

Despite its generally positive outlook on Macau’s gaming sector, analysts at Citigroup pointed out that the relatively slow recovery in visitor numbers is impacting investor confidence in the city’s recovery path with regards to earnings before interest, taxation, depreciation, and amortization (EBITDA). The firm stated that there appears to be some data noise in this aspect which needs to be muted out.

According to the latest figures from Macau’s Statistics and Census Service, overall visitation fell by 2.6 percent to 2.21 million in May, compared to the 2.27 million recorded in April. However, Citigroup analysts Ryan Cheung and George Choi said this data do not properly reflect the state of gaming recovery in Macau.

The analysts noted that the drop in overall visitation as reported by the relevant agency was mainly brought about by the relatively low number of group tour visitors, most of whom are lower-wagering players. Among the factors contributing to the slow recovery in this particular segment was the closure during the pandemic of several travel agencies offering group tour packages in Macau.

But when stats on higher-value hotel guests are taken into account, Macau is performing well, with the latest figures nearly reaching pre-pandemic levels. Citigroup said Macau is seeing a strong recovery in terms of the number of high-value players visiting the region which is already at 96 percent of the figures reported in 2019.

This data, coupled with the equally strong mass GGR numbers, indicate that Macau’s gaming recovery is well on track. Citigroup analysts said investors should focus more on these two areas and filter out the “data noise” created by the slow recovery in group tour visitation.

Non-Gaming Offerings Expected to Boost Casino Revenue

The non-gaming offerings of Macau’s six casino concessionaires should also boost revenue, according to Citigroup, citing various successful entertainment events and concerts staged at multiple casino resorts which contributed to the operators’ strong GGR performance in Q2 of 2023.