Amid rapidly falling visits to Macau, the casino sector stands to lose up to $2 billion in cash flow. Meanwhile, GGR in January has already dropped by 11.3%.
Coronavirus Continues to Slow Down Casino’s Results in Macau
The coronavirus outbreak in China will continue to take a toll on Macau’s gross gaming revenue (GGR), which already fell by 11.3% in January, 2020. Although the figure missed the predictions set out by analysts, the depression can be felt.
Visitations to Macau from the mainland and abroad have decreased as casinos are now facing indefinite closures while the virus is not abolished.
Multiple brands, including the Las Vegas Sands, already reported 80% fewer visits during the Chinese New Year holiday season – a time of the year usually associated with increased demand and interest in casino gaming.
Estimated $2 billion could be lost in cash, Fitch Ratings Service reported while the Gaming Inspection and Coordination Bureau reported that $2.76 billion has been collected from gamblers in January.
Tightening of the Borders, Falling Visits and Revenue
Nevertheless , Macau is fully prepared to batten down the hatches and resist the virus. Transportation channels with the mainland have been cut off to prevent infected people coming in contact with the healthy population. The transportation lockdown has included ferries as well as flights and train services.
Preliminary analyses put the most likely impact on GGR because of outbreak at 17% in the first quarter – a prospect that may yet come to realization, especially if the virus continues to spread. At the time of reporting, 14,300 people have been infected globally with the death toll rising to 305 people.
Meanwhile, Las Vegas Sands, Wynn Resorts and MGM Resorts have continued to see their performance indices fall at the stock exchange due to the fact that they collect a large chunk of their overall revenue from Macau. Melco Resorts and Entertainment, in fact, claims about 88% of its revenue from the special administrative zone.
If the outbreak continues to influence the progression negatively, the potential loss in total funds could hit $2 billion, specified Alex Bumazhny, a gaming analyst from Fitch.
Adelson and Executives Respond to the Situation, Acknowledge Its Gravity
Executives have been aware of the dangers that the outbreak imposes to business. Las Vegas Sands Chairman and CEO Sheldon Adelson has been among the managers to publicly comment on the seriousness of the situation.
As a result of the virus continuous spreading, all Las Vegas Sands employees have been asked to wear masks and gloves. Meanwhile, customers are being screened for potential signs of coronavirus.
The issue with this screening is that it is inefficient as a person can incubate the virus for up to 14 days, which makes the ability of the disease to spread and slip past security checks unnoticed.
In other words, the only way Las Vegas Sands’ Macau properties can properly monitor patrons is by quarantining them for a fortnight.
President Rob Goldstein has been more optimistic about Macau’s overall outlook, arguing that once the virus is abolished, there would be a lot of pent-up demand for gaming and business in Macau would boom once again.