Macau is suffering from a gaming drought that has resulted in 2019 being slightly weaker than expected.
There isn’t much cause for alarm, given that the city’s casinos are still contributing significantly to Macau’s wallet, and a slump every now and then is not anything out of the ordinary.
It might be time, however, for Macau to see 2019 as a write-off, especially given Morgan Stanley’s update that the city has yet to reach bottom for the year.
The financial giant said in a report this past Monday that casino earnings in Macau “have not bottomed” and updated its 2019 gross gaming revenue (GGR) forecast to -3% compared to last year.
Previously, it had expected to see just a -1% difference. Morgan Stanley analysts Praveen Choudhary and Thomas Allen added, “Despite our expectation of September GGR growth of 4 percent year-on-year (after two months of negative growth), we expect negative GGR growth in November/December.”
The drop is explained through several factors. The analysts believe that a recovery in VIP gaming could take place between now and the end of the year, but point out that VIP revenue has already deteriorated substantially over the past three months.
They predict VIP revenue will end up being 17% lower this year compared to 2018 and add that next year’s figure could be 2% lower than it was last year.