SOFTER HANGOVER FROM GOLDEN WEEK

2014/10/21

From：Macau Buisness Daily

Gaming revenues in the week following the public holiday dropped 30 percent, slightly better that last year’s 36 percent fall. October revenues are predicted to decrease 20 percent

This year’s Golden Week hangover was softer for the gaming industry here, a fact that could presage worse news for operators when October revenues are published. This month is already confirmed to be one of the worst since gambling was liberalised in Macau, with analysts estimating a drop of anywhere from 18 to 30 percent year-on-year.
The first test was the size of the decline in revenues following Golden Week, as casino revenues normally fall sharply after public holidays. This year was no exception but the decline was smoother than anticipated.
According to Wells Fargo, in the second week of October (until October 12) average daily revenues in casinos here totalled MOP867 million. That’s 30 percent less than what was posted in the previous week, when Golden Week was in full swing (October 1 to 6). During that period, gaming tables amassed MOP1.3 billion for the six biggest operators.
The 30 percent drop was, however, smaller than that in the same period last year. Following 2013’s Golden Week, gaming revenues decreased 36 percent in Macau. Some analysts underlined that if this year’s drop in the post-Golden Week period was similar to 2013, gaming revenues in Macau could plunge by 30 percent in October.

Still two digits

As that was not the case, Wells Fargo now expects a brighter – or at any rate less gloomy – outlook. Gaming revenues should decrease by 20-23 percent in October year-on-year, still the worst result in years. The US bank says that visitation in Macau was affected by the Hong Kong protesters. With the Golden Week effect behind us, the market is now focusing on two near term factors that could influence October’s performance. ‘Any improvement in the situation in Hong Kong and the pace of the smoking ban are key variables for the remainder of October’, wrote Wells Fargo in a note to clients yesterday.
Despite some investors and even Las Vegas Sands boss Sheldon Adelson saying that the smoking ban is a “non-issue”, other analysts are taking a more conservative position and wait to see the impact in the longer term. ‘We believe it’s too early to judge the impact of the smoking ban based on one week of revenues given numerous factors including Hong Kong protests, tour group disruptions and visa restrictions’, said Wells Fargo.
But if the smoking ban impact is still uncertain and the protests a temporary effect, the weakness of credit in China is more worrisome, affecting VIP and mass premium gamblers, two groups that are responsible for almost 60 percent of gaming revenues here. In September, the total credit flow in China has dropped by 25 percent from a year ago and in the third quarter fell 40 percent, also year-on-year. In the second quarter of this year, the credit flows in China increased by 24 percent. As a consequence, VIP revenues will likely decline by 20 percent until the first half of next year.

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