Macau’s hotel sector is displaying notable stability for the October 2024 Golden Week (GW), according to Morgan Stanley‘s latest report.
The data from the hotel survey reveal that there is ‘no sequential weakness’ in both the Average Daily Rate (ADR) and occupancy compared to October 2023. The ADR remains ‘flattish’ relative to the same period last year but is over 30 percent higher than in October 2019.
Occupancy levels are also consistent with those of October 2023 and 2019. This suggests that Macau’s hotel sector is holding strong, even as consumer trends in China show signs of weakness.
The survey, which includes data from 28 hotels in Macau for the period from September 28th, September 30th, and October 1st-7th, indicates that Sands continues to face challenges due to renovations, resulting in weaker ADR and occupancy at properties like the Londoner Hotel, Four Seasons, and St. Regis.
In contrast, Melco has experienced improvements in ADR and occupancy, particularly at Studio City and W Hotel. SJM Holdings has seen a decline in ADR for the Grand Lisboa Palace (GLP) and Karl Lagerfeld hotels, though occupancy has slightly improved.
Meanwhile, an investment memo from UBS highlights promising signs in the hotel sector. ‘Eighteen out of 31 hotels that we track are sold out or unavailable, higher than the same period before May Labor Week 2024 and October Golden Week 2023,’ indicate the analysts.
Hotel prices for the upcoming holiday period show mixed trends—tracking 5 percent higher compared to May Labor Week 2024 but 12 percent lower than October Golden Week 2023.
October GGR could grow 1% YoY
Morgan Stanley notes that market expectations for the upcoming Golden Week include daily gross gaming revenue (GGR) of MOP900 million ($112 million) and a full month GGR of MOP20 billion ($2.5 billion), reflecting a 1 percent year-on-year increase.
Analysts from Morgan Stanley expect Macau’s mass GGR to recover to 114-115 percent of 2019 levels, with VIP at 23-25 percent, similar to 2Q24. This implies a daily GGR of MOP900-915 million, reflecting a 77-78 percent recovery.
The Macao Government Tourism Office (MGTO) estimates that daily visitation will exceed 100,000 for the Golden Week, but analysts from Morgan Stanley note that this projection is conservative, given that the August daily average was 118,000.
In 2019, October Golden Week daily visitation was 20 percent higher than the average for July and August. Based on historical trends, Macau could receive a potential daily total visitation of around 129,000.
Despite a strong summer, with daily visitor arrivals rising from 97,500 (86 percent of 2019 levels) in July to 118,000 (101 percent of 2019 levels) in August, GGR for July and August lagged behind visitation rates.
