The economic impact of a global pandemic on the tourism economy: the case of COVID-19 and Macao’s destination- and gambling-dependent economy

ABSTRACT

Availability of full-year economic data is indicative of an opportune time to compare and contrast predicted and actual economic impact. In this regard, this study delineates the impact of the COVID-19 pandemic on the gambling industry using Macao, the world’s largest destination-dependent gambling hub, as a case. Using a series of quantitative analysis (ARIMA, correlation, and regression) on longitudinal data, the findings reveal that the revenue of the Macao gambling industry is significantly dependent on tourist arrivals, and that the industry is evidenced – using predicted and actual values – to experience an unprecedented decline in revenue as a result of plummeting tourist arrivals. The findings also indicate that Macao is a gambling-dependent economy as the decline in gambling revenue coincides with the decline in economic indicators such as GDP, median salary, and employment rate. This article concludes with pragmatic suggestions (e.g. reimagine strategies, seek virtual alternatives) to help gambling hubs that are destination-dependent to navigate in and recover from crisis such as the COVID-19 pandemic.

KEYWORDS:

• Coronavirus
• COVID-19
• pandemic
• gambling
• tourism
• Macao

Acknowledgement

The authors thank the Macao Gaming Inspection and Coordination Bureau and the Macao Statistics and Census Service for the secondary data used in this article.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1 Though some exhibitions and trade shows in Macao have adopted hybrid modes (physical and virtual) in 2020 (Macao SAR, 2020b), its effect appear to be limited. This is evident through the findings from the regression and seasonal ARMIA modelling, and through some observations of less than desirable outcomes. For example, the expenditure and receipts of 59 exhibitions organized in Macao amounted to MOP 292 million and MOP 180 million, respectively, resulting in a loss of MOP 112 million (DSEC, 2021c). These observations, when taken collectively, reaffirm Macao’s status as a gambling-dependent economy and a destination-dependent gambling hub.