Macau gaming could recover more quickly than casino play in Las Vegas, Nevada, in the United States, although the mechanics of Macau’s comeback were “opaque” in terms of mainland China public policy on outbound tourism, says a report from Fitch Ratings Inc.
But the credit rating institution said the outlook for casino resorts in other Asia-Pacific jurisdictions – ones reliant on international travellers – would in likelihood remain “tepid” in consumer-demand terms, amid the ongoing Covid-19 pandemic.
From September 23, residents in all places in China that qualify to take part in the nation’s Individual Visit Scheme, authorising independent outbound travel, will be able to apply for such exit permits for trips to Macau. The Chinese casino hub (pictured) has in effect a ‘travel bubble’ with the mainland.
At the height of the pandemic crisis, IVS permits for trips to Macau and elsewhere had been halted entirely. They were reintroduced in increments, starting with Macau’s neighbour, Zhuhai, and then the whole of Guangdong province from August 26.
But Fitch Ratings noted in its Wednesday report:“Travel restrictions remain in Hong Kong, with a potential for a reversal of mainland Chinese [travel easing] policy if there is an increase in coronavirus cases.”
In normal trading conditions, mainland China, Hong Kong and Taiwan have been key feeder markets for Macau’s tourism businesses.
At present, Macau’s compulsory 14-day quarantine rule still applies on inbound travellers that have been to Hong Kong or Taiwan in the 14 days prior to arriving in Macau. Foreign nationals – except those that also hold Macau ID – are barred from even entering Macau.
Fitch Ratings projected Macau’s gaming revenue for the third quarter and fourth quarter this year, would be down nearly 80-percent and 50-percent respectively, compared to the equivalent periods in 2019. The city’s gaming revenue for 2021 is projected to be about 20 percent below 2019 levels, the ratings house said.
“Elsewhere in Asia Pacific, destination casino resorts in the Philippines, Singapore and certain states of Australia recently reopened and will have the benefit of respective local markets,” Fitch Ratings wrote.
“However, these gaming markets have varying reliance on international travel, which will remain tepid in the near term,” the institution added.
Fitch Ratings said it assumed recovery for global gaming companies would occur for the whole of 2021, through to 2023, with those firms focused on “destination markets”, taking longer to recover, compared to those that have higher exposure to local markets and what Fitch Ratings termed “online channels,” i.e., investment in online gaming brands.
The institution said that negative “rating actions” had been applied to global gaming companies since the onset of the Covid-19 pandemic. But it noted that the credit profile for most of them, was “strong enough” for now, to allow them to weather the challenges of the pandemic.
