Macao casinos may have gotten their first real break since the COVID-19 pandemic first began in China and spread to the rest of the world. Authorities for the district lifted their requirement that visitors from the mainland to the city undergo medical observation and quarantine for two weeks.
Casinos are hoping this policy change will encourage VIP gamblers and others to visit once again. Monthly gambling revenue plunged 80% in 2020 and was still down 64% in January, though that was the best showing in a year.
Wynn Resorts (WYNN 1.35%) stock is up 13% this week on the development as it is heavily invested in VIP and mass premium gambling and derives most of its revenue and profits from Macao. Melco Resorts & Entertainment (MLCO 1.93%) is similarly dependent upon the upscale gambler and its stock is up 9% since Friday's close.
A multi-stage process for recovery
Visits to Macao plummeted in January. According to the region's Statistics & Census Service, there were just 556,000 visitors to the city, a 16% drop from December and an 80% decline from the year-ago period. Mainland visits were down 77%.
Casino operators will next look for China to resume electronic applications for its Individual Visit Scheme (IVS) visa.
To travel to Macao, mainland residents first need to apply for an IVS. Electronic applications were suspended in January 2020 as COVID-19 spread to prevent people from traveling to Hong Kong through Macao. Only in-person applications were accepted and processing of them can take two weeks. If electronic visa applications were reopened, same-day travel would be possible.
While lifting the quarantine requirement will help resort operators, there may be a long wait yet for a full recovery.