Macau Casino Closure Scheme Faces Shortening Extension Odds
Posted on: February 11, 2020, 08:31h.
Last updated on: February 11, 2020, 10:06h.
On Feb. 4, Macau Chief Executive Ho Iat Seng announced the Special Administrative Region’s (SAR) gaming properties would be shuttered for 15 days. The move came to stem the spread of the new coronavirus from China after the confirmed case count there reached 10.
Now, some analysts are speculating the closure order could be extended, news that comes at a tenuous times for operators in the world’s largest gaming center. In a note to clients Tuesday, Bernstein analysts say there are “variables” regarding when casinos there will reopen, noting there’s a “strong possibility” the 15-day order could prove light.
Forecasts for the near-term (i.e. first-half 2020) are largely guesses at this time, with the biggest variables being when casinos reopen, and even more importantly, when travel restrictions from China will be lifted,” said the research firm.
The specter of lengthening the closure plan comes after some analysts forecast a 75 percent decline in February gross gaming revenue (GGR) on the peninsula. That’s an estimate that was delivered following the original order to shutter gaming venues.
Some Executives Are Expecting It
Bernstein’s speculation on the Macau shutdowns jibes with comments made last week by Las Vegas Sands (LVS) COO and President Rob Goldstein. In an appearance before the Nevada Gaming Control Board (NGCB) on a non-related matter, Goldstein implied operators have limited clarity on exactly how long the closures will last, saying “it could be two weeks. It could be two months.”
LVS owns five integrated resorts on the peninsula. The original temporary termination plan called for Macau gaming venues to be closed until Feb. 19. But in a Monday press briefing, health officials didn’t commit to anything beyond saying they are closely monitoring the coronavirus situations.
Seng implemented the shutdown plan after the tenth documented case of the “Wuhan virus” was reported in the SAR. That number has not increased in recent days, and one patient has already been sent home from the hospital. Health officials believe the other nine patients could be discharged in the coming days.
Earlier today, the World Health Organization said there are 43,101 confirmed cases of the illness, now being dubbed COVID-19, with 1,018 deaths, all but one of which occurred in China.
Bernstein estimates month-to-date daily GGR for Macau operators is $25 million to $31.25 million, well below the February 2019 pace of $113.26 million.
Gaming companies with footprints on the peninsula have stopped short of issuing first-quarter guidance on recent earnings calls. But last week, Wynn Resorts CEO Matt Maddox said the closure plan is costing that company $2.4 million to $2.6 million per day, most of which is payroll expense.
Even if the shutdown is lifted, that doesn’t mean business will immediately pick up. Beijing has yet to comment on when it will restarting issuing visas for travelers looking to go to Macau. And a slew of airlines and other travel providers have halted service to the gaming hub from mainland China, Hong Kong, and Taiwan, among other regions.
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