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MACAU BUSINESS


“The best scenario is that we could hopefully keep our financial sheet


balanced by the end of this year [with the gradual relaxation of travel measures]... and it might take at least two to three


years for the gaming revenue to return to the pre-pandemic level,” says Luiz Lam, a junket representative


that we could hopefully keep our financial sheet balanced by the end of this year [with the gradual relaxation of travel measures]... and it might take at least two to three years for the gaming revenue to return to the pre-pandemic level.” He indicates the minimum cost for running a VIP room in the city, excluding payrolls to staff, is some MOP2 million a month. “For a large junket operator, which manages a dozen or more VIP rooms, it might lose tens of millions and even more than MOP100 million a month, including payrolls to staff, since the outbreak of COVID-19,” he continues.


No major layoff yet The gaming industry, tourism, and the city’s economy, have been in bad shape since the onset of the pandemic in late January. The Macau gaming revenue only amounted to MOP33.72 billion in the first six months of this year, plunging 77.4 per cent year-on-year, an unprecedented decline since the liberalisation of the gaming industry in 2002, latest official data show, in light of the absence of travellers over the border and travel restrictions. A breakdown of the data shows the VIP gaming revenue


reached MOP16.31 billion in the first half of 2020, declining by 77.3 per cent from the previous year and accounting for 48.4 per cent of all casino revenue. The mass revenue, including slot revenue, stood at MOP17.4 billion in the January-June period, also down by 77.5 per cent year-on-year.


A source in the junket segment, speaking on conditions of anonymity, pinpoints the operation of the major players have remained stable so far, albeit being embroiled in the turmoil for over half a year. Suncity Group, widely regarded by market analysts as the largest junket operator here by rolling chip volume, has been rumoured to be having financial difficulties. However, its boss, Alvin Chau Cheok Wa, denied this in a public video, claiming the financial situation of the group remains sound with a fiscal reserve of HK$10.58 billion and a cash flow of HK$18.6 billion in its daily operation. “The major junket operators have adopted various means


to maintain the cash flow, such as scaling down the size of their operation,” the junket source says. “Concerning the headcount, most have basically heeded the calls of the Government in ensuring the local employment and there has not been any major dismissal of staff; some have just offered a remuneration package that is not too bad in consideration of the current business climate for the retirement and voluntary resignation of staff.” Many of the existing staff of the junkets now work about


10-15 days a month and are entitled to about one-third to half of their monthly earnings, the source says. “It’s really hard to predict at the moment, but should there not be any major upturn in the next few months, I’m not surprised some junkets might start to cut down a significant number of staff and close down some VIP rooms to keep their operation afloat,” the source adds.


Streamlining A veteran junket operator in the city for more than three decades, Macau Golden Group, ceased operation of all its three VIP rooms at the Hotel Lisboa complex on 31 July due to low business volume. This decision leaves the property, founded by the late casino mogul Stanley Ho Hung Sun, with no VIP room, and also means Golden Group now only has five VIP rooms in the city, all located at Grand Lisboa, an adjacent property to Hotel Lisboa that was also founded by Mr Ho. There is no concrete public data on the number of VIP


rooms operating in the city now but latest figures from the local gaming regulator, Gaming and Inspection and Coordination Bureau (DICJ), show there were 95 individual and entity promoters authorised to run junket operations as of early 2020. This represented a 5 per cent drop from early 2019, marking the seventh consecutive annual decline over the anti-corruption campaign and slowing economic growth in the mainland and heightened supervision on the junket segment throughout the years. “According to our observation and data gathering, about 6-7 VIP rooms have ceased operation since the onset of the pandemic,” says Mr Lam, who also does not rule out more junkets will further streamline their scale in the near future.


Slowing repayments While the resumption of issuing new visas for the mainlanders to Macau is crucial, he stresses the recovery of the junket segment relies on the economic fundamentals of the mainland. “Despite the negative impact from


26 SEPTEMBER 2020


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