The most obvious solution to revive Macau’s struggling casino industry is to stop the anti-corruption crackdown and bring back VIP gamblers from Mainland China. Since that is not likely to happen in the near future, brokerage firm Sanford C. Bernstein Ltd have highlighted a few alternatives.
The firm released a note reported by GGRAsia saying that changes to the Individual Visit Scheme (IVS) stretching its coverage to more cities in Mainland China will have a positive impact on Macau’s casino industry. Other alternatives to boost the Pearl River Delta economy include changes to policies that provide more support to Macau’s casinos and developing Macau’s reputation for being a world centre for leisure and tourism.
Bernstein analysts believe that Beijing can make changes to its current IVS policy to optimize and make it more effective. The existing IVS policy permits Mainland China residents from forty nine cities to apply for a visa to independently travel to Hong Kong and Macau. As of now the IVS policy allows a max of one or two entries within the visa period.
Bernstein analysts believe that if multiple entries are provided to key cities, it will have a significant impact on Macau’s economy. They state that increasing the number of days a visitor can remain in Macau will not have much of an impact as the general duration of a visit is between two to four days.
Visitors who use the IVS system tend to spend more money at Macau’s slot machines and casino tables than visitors who arrive on packaged tours. This is one of the reasons why investors who are interested in Macau continue to closely monitor the IVS system as close to a fifth of Mainland China residents are allowed to use the IVS and apply for a visa to visit Macau.
While recent trends in Macau’s gross gaming revenue (GGR) suggest that the casino industry is slowly recovering, analysts from Daiwa Securities Group Inc have cautioned investors to not depend on the weekly GGR numbers.
In a statement, Jamie Soo, Adrian Chan and Jennifer Wu of Daiwa said “There have been increasing inconsistencies between various data sources as well as against observations noted on the ground. We highlight that the reliability of these figures is in question, we strongly advise investors to exercise a very high degree of caution when trying to extrapolate trends from the recent weekly numbers and/or to evaluate investment decisions based on them.”