Financial services firm Moody’s has cautioned that the recovery of the gaming industry in the Asia-Pacific region will be long and uncertain, as a second wave of the pandemic may upset progress so far.
Asia-Pacific’s Recovery to Be Long, Says Moody’s
The Asia-Pacific region will see a further decline, says credit rating firm Moody’s which predicts that earnings in Macau, Singapore, and the better part of the region will probably remain depressed. The prediction is not entirely out of place with Macau on shutdown and revenue dropping by 90% for a third consecutive month, and China still not allowing travelers to cross the border with the special administrative region.
Conversely, air travel bookings have been going up for Las Vegas with over 330 flights booked per day, marking a slight uptick in operations. A rebound of operations in the Asia Pacific is expected in 2021 at the earliest, although no full recovery will take place that year.
According to Moody’s, many of the gaming giants operating in the region will probably lose additional value before soaring back up again. However, not everything is doomed with Moody’s saying that earnings should begin to recover in the second half of 2020. In 2021, things will pick up further, although they would still not catch up to previous results.
However, this recovery is precarious as it may be easily disrupted by a second wave of the pandemic, which is picking up speed in the world. Macau, one of the leading hubs in the region had to shut down in February and it has not recovered at all so far, mostly because of the global air traffic ban and China’s prohibition on crossing borders.
Macau’s VIP gaming rooms have even been forced to shut down and plan to lay off workers, as no alternative is in sight and the uncertainty grows. In Singapore, the Marina Bay Sands and Resorts World Sentosa had to close down and have restarted at reduced capacity in the
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Singapore and Macau have not been the only nations imposing strict restrictions, many of which are still in place. Malaysia and Australia have also stuck to limited air travel as well as various restrictions on casino floors.
In the Philippines, the offshore gaming industry or POGOs has remained shut as well. “Decline in tourism,” Moody’s explained, “culminated in the suspension of gaming operations, as governments implemented measures to contain the spread of the coronavirus.”
Slow economic growth is another reason to see casino revenue fall further as consumers would be less willing to spend more. Moody’s also projects a 70% drop in earnings before interest, taxes, depreciation, and amortization (EBTIDA) for the region in 2020, and it has posted a “negative” outlook for the Asia-Pacific region.
Many shares are now rated as junk, and recovery continues to remain contingent upon whether a second wave of the coronavirus would strike.