The fortunes of Macau casinos are looking a little rosier after the Chinese government relaxed the rules on transit visas for visitors.
A relaxation of visa requirements means it’s easier for mainland Chinese gamblers to bring cash into the former Portuguese colony.
Under new rules, travelers to Macau who hold a Chinese passport can stay for seven days as opposed to the previous limit of five days.
While it’s a small victory for Macau’s big resorts, it’s a sticking plaster over what has been a torrid year or two for gambling in the territory.
“Perfect Storm” For Macau
Chinese president, Xi Jinping, has been on a crusade to ‘clean up’ Macau, with initial limits on the amount of money able to be brought to the city that was introduced last year.
This followed a massive anti-corruption drive which effectively stopped public officials taking off for Macau with millions of yuan stuffed in their suitcases to gamble with.
In addition, a partial smoking ban in Macau and a general economic slowdown in China has formed a perfect storm which the gambling mecca is still struggling to weather.
Macau casino operators recorded yet another drop in gaming revenue last month, with gross revenue slumping 36.2 percent; its 13th month of consecutive drops. Revenue fell to 17.4 billion patacas (AUD2.8 billion), official data showed.
Melco Crown, the firm part-owned by Crown Resorts CEO, James Packer, experienced a jump in share price on news of the transit ruling. Melco shares were up 10 percent last week.
Speaking about the effects of China’s stance, Bernstein Research’s Vitaly Umansky struck a positive note:
“The new transit visa policy confirms our view that increased Chinese visitors is in support of Macau’s agenda to transform itself into a world tourist destination.
“For this reason we maintain our view that it is not in the interest of Macau or Beijing government to implement a cap of maximum Chinese visitor arrivals to Macau as was once feared as a possibility.”
Morgan Stanley analysts were more cautious, however, with Praveen Choudhary telling the FT that the visa restrictions lift would not change the overall drop in VIP gamblers flooding Macau’s high-roller rooms.
Macau To Get New Casinos
In the gambling industry, in Macau at least, there’s no such thing as austerity measures, and the city is forging ahead with even bigger and more expensive new resorts in a bid to chase off the economic gloom.
Studio City, of which Melco Crown is a major investor, is a proposed $3.2 billion mega-resort, due for completion in 2016.
In line with China’s ideal of appealing to a wider tourist base than just gamblers, Studio City will feature Hollywood-themed entertainment palaces, as well as Macau’s first branch of the world-famous Pacha nightclub.
Whether James Packer’s alleged new squeeze, Mariah Carey, is already booked to appear is not yet known.