Macau gears up for Lunar New Year amid Wuhan pneumonia outbreak

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Just days from the Lunar New Year holiday, the growing threat of the novel coronavirus, also known as Wuhan pneumonia, could not have come at a worse time for China.

The time period surrounding the Golden Week is the largest human migration event on the planet far surpassing other mass traveling events in which over seven times the amount of people travel compared to Thanksgiving in the United States.

One of three Chinese golden weeks, the Lunar New Year Golden Week is the largest and goes from January 24-30th this year. In 2019, the New Year holiday saw over 1.2 million people travel to Macau compared with over 900,000 during the National Day Golden week in October.

Amidst China’s 6th reported death from the virus, nearly 300 confirmed cases, and the confirmation that human-to-human transmission of the virus is possible, Macau issued an executive order to setup a coordination center specifically help oversee and coordinate public and private efforts on controlling the disease.

Just days later, Macau has its first reported case of the novel coronavirus and the numbers have climbed to over 500 cases and 17 deaths.

Macau has been proactive since news of the virus broke, installing temperature sensors at border crossings. The Macau Government Tourism Office joined forces with the Health Bureau to hold two briefing sessions for the tourism and hotel industries to learn more about the related situation and preventive measures. While Macau has had no confirmed cases of the virus recently, Macau stocks declined 5-6% Monday alongside mainland travel stocks as investors fear the virus may majorly impact travel across the country.

However, analyst Edward Engel with Macquarie Research noted that several Macau hotels were sold out ahead of the holiday and that “solid GGR for the rest of the month could be the catalyst that eases concerns over virus related travel disruptions.” Engel concluded from last week’s analysis of channel checks that January GGR as trending flat to -1% YoY and this week updated the forecast to slightly lower expectations to have January end -1% to -2% YoY. But with Chinese New Year entirely in February last year, Macquarie is currently forecasting February GGR to be down 4-6%.

The recently reopened Macau-Zhuhai ferry and border checkpoint should help ease visitor arrivals. With one more border crossing than the past three Lunar New Years, the increased burden of health screening should be slightly offset by this increased capacity.