Chinese New Year Brings Major Macau Revenue Boost
Last week, we reported on the news that Macau’s economy fell in January below what it was two years ago. To some, it looked like the gambling industry here was in trouble. February has brought a Macau revenue boost that’s now being directly attributed to the Chinese New Year celebrations.
It’s a great sign for both locals and gambling companies inside Macau. Share prices are rising once again, and tourism here is at an all-time high. How long will it last?
Fluctuations in Macau’s Revenue Earnings
Macau is no stranger to revenue fluctuations. This small territory has shifted between month-by-month earnings and losses for many years. From 2014 to 2016, the casino earnings here fell by more than 36%.
This past January, the revenue slumped down below what it was a year prior for the first time since 2016. The reality, though, is that the economy here decreased by just 5% that month. That was actually better than most analysts predicted.
China’s economy has been slowing down. With that comes a major decrease in high-rollers gambling. Macau also recently implemented a smoking ban throughout all casinos. This move has almost certainly affected the number of players visiting this territory.
It’s not much of a surprise to see Chinese New Year bring a major Macau revenue boost. According to multiple sources, more than 1.2 million people visited Macau during the week-long celebrations. This represents a 26% increase in tourism from the year before.
Will the Macau Revenue Boost Continue into 2019?
In our previous article covering Macau’s revenue losses from January, we discussed that this small area’s tourism is higher than ever before. The Hong Kong-Macau-Zhuhai Bridge is bringing in millions of visitors per year. Unfortunately, not all these visitors are gambling.
China’s slowing economic development has deterred many gamblers from visiting Macau. These players are simply choosing to hold onto their money more than they were in previous years. For this reason, Macau’s industry will likely slow down later this year.
That doesn’t mean this territory will stop being profitable. Macau remains the gaming capital of the world. Many of the most powerful gambling companies operate casinos here.
The shares for some of these casinos dropped after reports that Macau’s revenue fell in January. In the wake of Macau’s tourism and revenue increase this month, many of these companies are seeing an increase in share prices. Galaxy Entertainment Group saw its stock price rise by 1.5%. Sands China and MGM China saw their shares increase by even more.
It’s unclear if the revenue increase from the Chinese New Year will continue over the next several months. As China’s economy continues to slow, so will Macau’s gambling industry. Exactly how much the revenue earnings will fall here is unknown.
Gambling Operators in Macau Bracing for Impact
Macau’s economy is almost sure to take a slight hit this year. The real question now is whether this will continue over the next decade.
In 2020, some of the biggest casino licenses here will expire. Policy and regulation changes could be on the horizon. This year, Macau will get itself a new leader.
All of these factors point to a potential decline in Macau’s overall economy. Despite the huge increase in tourism, fewer people here are spending money in the casinos. Chinese President Xi Jinping announcing serious risks to the economy isn’t going to help, either.
Wynn Resorts’ CEO Matt Maddox recently told the media that he’s “watching the situation with caution.” He continued by saying:
“We continue to experience peaks and valleys in Macau. Where the trade wars (with the US) end up is uncertain. We can’t control the certitudes of the market.”
The next couple of months should give a better idea as to where Macau’s economy is heading. If 2019 sees a decrease in revenue from last year, the share prices of gambling companies here are likely to fall dramatically.
Do you think the Macau revenue boost here will continue for the rest of the month? Is the economy here in trouble? Make sure to let us know what you think in the comment section below!
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