Macau gaming industry to rebound once travel restrictions are erased
Analysts agree that the gaming industry’s recovery could come quickly once travel restrictions in Macau are lifted.
Macau.- Macau casinos are reaching the end of what’s been a dire month for trade, but there is a light of hope at the end of the tunnel. During a webinar held by the France Macau Chamber of Commerce (FMCC), analysts coincided that the recovery of the Macau tourism market could be as rapid as that of Las Vegas once travel restrictions are lifted.
In May, Las Vegas operators reported gaming winnings of US$1.3bn, up 5.71 per cent from a year earlier, according to the Nevada Gaming Control Board. That was higher than pre-pandemic levels and marked the 15th straight month with more than US$1bn in winnings.
Flights to Las Vegas Airport were also up, with May the airport’s third-busiest month on record. Hotel occupancy rates also rebounded soon after restrictions were lifted.
According to Macau Business, Andrew Klebanow, co-founder and senior partner of C3 Gaming, said: “Once vaccines started to become widely available in March 2021 people felt very comfortable going out again and there was this pent-up demand for entertainment, to just get out of the house or get out of town to a casino and to escape.”
Joseph Greff from JP Morgan Securities came to a similar conclusion and said the gaming industry might rebound quickly once inbound travel restrictions are relaxed.
During an interview with business news outlet CNBC, Greff pointed out that while the outlook is tough for the near term, in the longer term, Macau could have access “to a large quantum of people with a proclivity to game.”
He added: “When the number of Covid cases improves, when vaccination rates improve, that should … lead to travel enhancement policies, to allow more people from mainland China and Hong Kong to travel to Macau.”
Greff noted that casinos are suffering significant EBITDA losses since they must pay employees and so they are not only facing a revenue problem, but also an expense problem.
A few weeks ago, analysts at JP Morgan Securities published a report estimating that Macau casino operators will end the year with approximately US$800m in EBITDA losses due to the most recent outbreak of Covid-19 cases.
Macau’s casinos were allowed to reopen this week at 50 per cent of normal staffing after two weeks of closure.
