Concerns over the potential to catch COVID-19, combined with a willingness to travel domestically and low penetration, have Macau better placed than other destinations, including Hong Kong, to attract mainland China visitors in the short-term.
The findings formed part of a recent survey conducted by investment bank Morgan Stanley of 2,667 Chinese residents aged between 18 and 49 from Tier 1 to 3 mainland China cities. Among the notable results, 68% of those surveyed said they had traveled within China for leisure and stayed at least one night in a hotel in 2019 or 2020, however only 18% of people had been to Macau, suggesting considerable potential upside to visitation and GGR.
“These are same kind of people who could go to Macau,” said analysts Praveen Choudhary, Gareth Leung and Thomas Allen in a note.
“This supports our longer-term thesis that low China penetration (excluding Guangdong) should continue to drive growth in Macau gaming.”
Perhaps more importantly in the short-term is the impact of COVID-19.
“The biggest reason for not traveling overseas, or to Hong Kong and Macau, was the worry about catching COVID,” Morgan Stanley said.
“Considering Macau has not seen any new cases in more than 130 days, we think this will help Mainland Chinese to travel to Macau more than other overseas destinations including Hong Kong.”
However, “more people are delaying trips to Macau to at least six months from now (35% vs 25% in May), and there are also fewer people planning to visit Macau in the next six months (14% vs 26% in May). This may change after national IVS is reinstated on 23 September however, as travel restrictions for other destinations remain.”
Morgan Stanley estimates Macau GGR to remain down by around 80% year-on-year through August and September due to partial reinstatement of IVS before improving to a 36% decline in 4Q20, aided by pent-up demand and an inability to travel to destinations such as Singapore, Cambodia or Las Vegas.
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