Visitor arrivals are falling
The gaming market in Macao has seen a steep fall in the past year due to a fall in the number of VIP or high-net value visitors in the city. However, this hasn’t stopped the tourism industry completely. The number of visitor arrivals in May showed positive upward movement.
According to the DSEC (The Statistics and Census Service, Government of Macao SAR), the arrivals rose by 0.9% YoY (year-over-year)—driven by strong growth in the inflow of visitors from South Korea, Switzerland, Portugal, India, the Philippines, and Hong Kong. The number of same-day visitors also rose by 2.6% YoY. The average length of stay rose by a marginal 0.1% YoY to 1.1 days.
The visitors from China contributed to about 66% of the arrivals. The numbers rose by 0.7% YoY for May—primarily driven by the 5.1% YoY growth in visitors from Hong Kong. Visitors from Mainland China fell by 0.5% YoY. Visitors traveling under the “Individual Visit Scheme” rose by 3.5% YoY. On a positive note, the number of long-haul visitors from the US rose compared to last year. However, visitor arrivals from Japan, Thailand, Singapore, Australia, France, and Russia fell.
In May, the slight growth in visitor arrivals was a sign of hope for all the casino operators in the region. Major companies like Las Vegas Sands (LVS), Wynn Resorts (WYNN), Melco Crown Entertainment (MPEL), and MGM Resorts (MGM) have been investing in growing their properties in the region. They would benefit from any signs of rising tourism.
Las Vegas Sands and Wynn Resorts account for ~8% and 7%, respectively, of the VanEck Vectors Gaming ETF (BJK). Investors can also invest in the Consumer Discretionary Select Sector SPDR Fund (XLY). XLY holds ~1% in casino stocks.