With more gaming recovery on the horizon, Fitch maintains Macau's AA grade.

Decrease in Macau GGR
As the economy of the region recovers from the pandemic, Fitch likewise assigned Macau a "stable" outlook. After travel restrictions were relaxed in early 2023, the market responded positively, reviving the gaming industry that had been crippled by extremely stringent regulations.

The gambling hub of Macau made MOP19.3bn (£1.9bn/€2.2bn/$2.4bn) in January. Since reopening after the pandemic, this was its second-highest total.

Gross gaming revenue (GGR) is projected by Fitch to reach approximately 79.5% of 2019 levels in 2024, indicating that the recovery will persist. This follows 2023, when GGR was 62.6% of pre-pandemic levels, and Fitch's prediction that GGR would be 7.6% more than budgeted for.

The growing number of tourists visiting Macau is something that Fitch sees as a positive indicator for the future of the casino business there.

Macau: A Promising Beginning to 2024
Its second-highest revenue figure post-pandemic was mop19.3bn in January.
In February GGR, Macau made MOP18.5 billion. This was down 4.1% from January, but up 79.1% from the same month a year ago.

A total of MOP37.8bn in GGR has been generated so far in 2024, an increase of 72.7% compared to the corresponding period in 2023. According to Fitch, the surge of mainland Chinese visitors for the New Year celebrations is responsible for the early 2024 performance, which is almost 75% of the 2019 level.

Despite Fitch's warning that the VIP segment will rebound at a slower pace, the mass-market category is expected to keep driving Macau's gaming recovery. Consequently, gaming earnings will be limited for the government.

The more strict regulatory environment for junket operators in Macau, which followed a bill in 2022, is having an adverse effect on the VIP market. The GGR share of the mass market increased from 54% in 2019 to 75% in 2023 as a result of these improvements.

Fitch's caution

changes in the Chinese economy may hinder the expansion of gaming in Macau.
Although Fitch has a positive outlook on Macau, the company did point out some concerns that might affect the casino business there.

As an example, the Chinese government is seeking economic diversification, as it has jurisdiction over Macau. The company's goal is to boost the non-gaming industries' contribution to gross value added from less than 50% in 2019 to around 60% by 2028.

To improve the emerging non-gaming sectors and create more sustainable growth, the government is attempting to increase tourism and non-gaming offers.

The "erosion" of Macau's balance sheet and subsequent restriction of regional growth could be caused by the Chinese economy's current downturn, which was also mentioned.

Recovery in Macau to Persist
Las Vegas Sands Macau's income increased by more than 300 percent in 2023.
With a 333.8% year-on-year growth in 2023's cumulative gross income of MOP183.1bn, Macau's response to the terrible COVID-19 closure was truly remarkable.

Due in large part to the sustained increase in tourism and gaming income in Macau, Fitch changed the outlook of SJM Holdings, a major operator in the city, from "negative" to "stable" in January.

Profits for Las Vegas Sands' fiscal year 2023 might reach $10.4 billion, thanks in large part to the prosperity of Macau. Macau contributed significantly to this expansion, driving regional income to a whopping 303.1% increase to $6.6bn.

Rob Goldstein, chief executive and chairman of Sands, is optimistic about the region's prospects following the partial cancellation of COVID-19 restrictions in January 2023 in Macau.

"The future growth of Macau is an ongoing speculation," Goldstein stated. Is $30–$35–$40 billion possible for the Macau market? This is our firm belief: it will.