Macau’s recovery slower than expected, Bill Hornbuckle says

Bill Hornbuckle is MGM Resorts International president and CEO.
Bill Hornbuckle is MGM Resorts International president and CEO.

Despite a slower recovery, MGM Resorts’ CEO believes Macau’s market is in good shape.

Macau.- Although Macau has started to show some signs of recovery, especially after the Labour Day break, it is still far from pre-pandemic levels.

Bill Hornbuckle, MGM Resorts International president and CEO, has recognised that the recovery “is more disappointing than other places such as Las Vegas.”

However, Hornbuckle is confident Macau’s economy will improve in the next few months. Speaking at the Alliance Bernstein 37th Annual Strategic Decisions Conference, he said: “We’ll see ebbing and flowing over the next couple of quarters.

“I can’t imagine as they continue to get jabs into their arms, albeit slower than the US, that we’re not going to return to a new norm.”

Hornbuckle also referred to the rise in Covid-19 cases in Guangdong and its link to a possible drop in the GGR. he praised how local authorities had reacted “harshly and strongly” to tackle the outbreak.

When talking about the mass-market gambling business, Hornbuckle said it had returned to 60 per cent of pre-pandemic levels. He added that MGM China increased its market share of in-house VIP.

Hornbuckle said: “It’s really because as the market shifts away from junket to in-house VIP, we’ve been ideally structured over many decades in Asia for a branch system… to ultimately be able to market to those customers and bring them into the property.”

MGM China reported that revenue for the first quarter of 2021 reached HKD2.30bn (US$296.4m), with EBITDA of HK$84.3m (US$10.8m).

According to the financial report, total revenue for the period was HKD2.30bn (US$296.4m), supported by growth in the mass-market segment.

MGM China reported a second consecutive quarter of positive EBITDA at HK$84.3m (US$10.8m). However, EBITDA was down 88 per cent when compared to the previous quarter.

MGM Macau recorded an occupancy rate of 81 per cent and revenue of HK$1.3bn, while MGM Cotai reached an occupancy rate of 47 per cent and reported revenue of HK$981m.

When will Macau’s economy start to recover?

Moody’s Investor Service has said that it believes Macau’s economy could rebound to pre-Covid-19 levels by 2024.

Analysts said that although the special administrative region’s (SAR) economy has been seriously hit by the Covid-19 pandemic, Macau maintains strong sovereign finances.

Moody’s has given Macau an Aa3 rating, which means it is subject to very low credit risk. It said: “The growth volatility of Macau’s economy is among the highest of all rated sovereigns.

“But despite the highly volatile nature of economic growth, Macao’s vast fiscal and external reserves — significantly stronger than those of similarly rated peers — and very high per capita incomes continue to support its credit profile.”

Morgan Stanley cut its forecast for Macau gross gaming revenue (GGR) this year by 19 per cent to US$16.3bn.

Previously, analysts had said Macau GGR could reach MOP189bn (US$23.6bn), about 65 per cent of GGR reported in 2019. However, the banking group now thinks it will reach just MOP130.19bn (US$16.3bn).

That would be just 45 per cent of 2019 levels, but it would an improvement of 115.4 per cent when compared to 2020.

Morgan Stanley said it had revised its previous forecast due to the new rise in Covid-19 cases in Asia and the delay in easing travel restrictions between Hong Kong and Macau.

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