Typhoon, Economy Give Macau Casinos Worst Month in Two Years

(Bloomberg) -- A typhoon that shut Macau casinos for more than a day and a pullback by high-stakes bettors resulted in the slowest revenue growth in two years for the world’s largest gambling hub.

Gross gaming revenue in Macau rose 2.8 percent in September to 22 billion patacas ($2.7 billion) from a year earlier, according to data Monday from the Gaming Inspection & Coordination Bureau. That missed the median analyst estimate for growth of 6.5 percent and was the weakest showing since August 2016, adding a note of pessimism to the start of the Golden Week holiday.

The result was far below expectations even after analysts cut their forecasts in half after Typhoon Mangkhut ripped through Macau in mid-September. The storm forced a 33-hour shutdown of casinos, the first time resorts have closed since gambling licenses were given out in 2002, according to industry employees. The shutdown may cost casinos as much as 1.5 billion patacas in lost gaming revenue, estimated Union Gaming Securities Asia Ltd. analyst Grant Govertsen.

Latest Setback

The typhoon was the latest setback for the casino industry, as Macau has seen softening growth in gaming revenue since the second quarter. Analysts have cut their estimates for this year and 2019 as a weakening yuan, China’s economic slowdown and escalating trade tensions with the U.S. threaten to derail 26 straight months of revenue gains in Macau.

Key junkets didn’t see improved volume after the Mid Autumn Festival in late September following the typhoon, and VIP growth was negative for the month, Morgan Stanley analysts Praveen Choudhary and Jeremy An wrote in a note Monday.

U.S. stocks with exposure to casinos in Macau declined. Wynn Resorts Ltd. lost 2.3 percent to $124.19 at 10:01 a.m. in New York. MGM Resorts International fell 1.4 percent, while Las Vegas Sands Corp. slid 0.8 percent.

Golden Week

Analysts forecast the weakening trend will continue, with October growth predicted at 5 percent. The industry is closely watching the influx of tourists during Golden Week as an indicator for the rest of the month. The holiday, which started on Monday, is considered peak season for Macau.

About 40 percent of rooms in the territory’s 3-to-5-star hotels were fully booked as of Friday, according to online booking websites including Agoda.com and Expedia. That compares with 80 percent at roughly the same time last year. Hotels in Macau are charging about double or triple their usual prices, a lower premium than in 2017 when some suites were listed at five times the typical rate.

The Bloomberg Intelligence gauge of Macau casino stocks is down about 35 percent since the end of May on worries that high rollers are easing up on their bets, with Wynn Macau Ltd. and MGM China Holdings Ltd. tumbling more than 40 percent.

©2018 Bloomberg L.P.