What started out as a promising year for Macau's tourism industry has turned out to be a major setback for the special administrative region, as visitors are put off by the rapidly spreading coronavirus epidemic that originated in the central Chinese city of Wuhan.
The losses have already affected Macau's events calendar as well as gaming stocks of its concessionaires.
Mainland Chinese visitors, who make the bulk of tourists, were down a startling 88.5 percent on Monday, the fourth day of the Lunar New Year holiday period compared to a year earlier, rapidly deteriorating from 38 percent, 64.7 percent and 79.6 percent over the first 3 days. Overall mainland tourist numbers were 75.1 percent lower over the first 4 days, according to data from the Macau Government Tourism Office.
Total visitor numbers to Macau over the 4 days of the Lunar New Year sank 69 percent year on year to 194,521. Macau's tourism numbers are closely associated with mass gaming revenue.
Investment bank Jefferies said in a research note that the lower numbers would be "negative" for gaming stocks as casinos' revenue is closely tied to visitor levels.
Over the last 3 years, the 17 days surrounding the 7-day holiday in mainland China during the Lunar New Year period contributed around 5 to 5.5 percent of annual gross gaming revenue in Macau, according to a research note issued by Sanford Bernstein on Friday.
Even though tourists to the city were up strongly in early January, Macau authorities had expected a 6 percent decline year on year during the week long Lunar New Year holiday, said Andrew Lee, equity analyst at Jefferies.
He said comparing the impact on gaming stock prices during the 2003 SARS (severe acute respiratory syndrome) outbreak to the current Wuhan coronavirus was difficult, because only Galaxy Entertainment Group was listed then.
Jefferies noted that visitor levels from China to Macau dropped 16.1 percent and 24.2 percent in April and May 2003, but in April and May 2004 jumped 144.5 and 200.4 percent, respectively.
The investment bank added the gaming sector was likely to remain under pressure until the virus outbreak was brought under control.
Between January 21, when news of the Wuhan outbreak spread, to January 24, NYSE-traded shares of Las Vegas Sands fell 8.4 percent to $67.8 per share. In 2018, Las Vegas Sands' made $9.8 billion in casino revenues, of which $6.7 billion was from Macau alone. Las Vegas Sands also operates casinos in Singapore and the United States.
Studio City, part of the Melco Group, has postponed two concerts by Canto-pop star Leon Lai, originally to be held on January 31 and February 1 at the 5,000-seat Studio City Event Center. So far, no other event cancellations have been announced by other gaming concessionaires in Macau. The House of Dancing Water, one of the key show attractions for City of Dreams, also part of Melco Group, has been suspended until further notice. Two shows at the Venetian Macau, scheduled for end of January and February 1, have been postponed until further notice.
Gaming industry media reported on January 23 that Macau Chief Executive Ho Iat-seng had discussed the possibility of temporarily closing down some of the casinos if enough cases of the Wuhan coronavirus were to emerge. As of Tuesday, the city had confirmed six cases.
Ho reportedly said that, given the experience of SARS, "if the situation is so serious, no-one will go to a casino." On Sunday, the Macau government announced that anyone from Hubei province, or anyone who had visited the province in the last 14 days, would not be allowed into Macau.
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