Operator News
China – Keeping casinos open is costing Macau operators up to US$4m a day
By Phil - 31 March 2020
Casino operators in Macau are losing between $1.5m to $4m a day just to keep their casinos operational.
With visitors banned from mainland China, Hong Kong and Taiwan who have travelled overseas, GGR fell 79.7 per cent year-on-year to 5.3bn patacas ($664m) in March. Macau’s Public Security Police, revealed that Macau saw just 230 tourists enter on Sunday and around 270 tourists on Monday compared to daily average in 2019 of 108,000 visits per day. The authorities also confirmed stricter entry criteria for visitors arriving from mainland China, Hong Kong and Taiwan, including a 14-day quarantine requirement for people arriving from Hong Kong.
Morgan Stanley expects gross gaming revenues to return to normal levels in Macau by October with the first quarter to drop by 60 per cent, the second quarter by 56 per cent, the third quarter by 18 per cent and the fourth quarter to fall by five per cent year-on-year.
Analysts Praveen Choudhary, Thomas Allen and Gareth Leung believe the year as a whole will be down 35 per cent recovering to growth of 40 per cent in 2021.
“As COVID-19 has spread globally and travel restrictions have tightened across the globe, we delay normalisation to October,” the analysts said. “While consensus may expect 2021 to be similar to 2019, we believe there may be lingering concerns on group travel and entertainment, which could continue to weigh on the mass business (especially table games) for longer.While a weaker quarter in 2020 should not matter if our price targets are pegged to 2021, there is growing concern that our 2021 EBITDA may not reach back to the last peak in 2019. We expect things to normalise by October and VIP to recover faster than the mass segment.”
