China travel advisories likely short lived: MGM China COO
There was “reason to be optimistic” about the first-quarter outlook for the Macau gaming market, said on Wednesday Hubert Wang, president and chief operating officer (COO) of MGM China Holdings Ltd.
There was in particular, “no reason to believe” advisory notices to limit out-of-province travel in mainland China after new Covid-19 cases, “will stay in place for a long period of time,” added the executive.
Mainland China is the only place to have a largely quarantine-free travel bubble with Macau.
Mr Wang was speaking on the fourth-quarter earnings call of MGM China’s parent, United States-based MGM Resorts International.
Mr Wang noted that MGM China had been “cash flow positive” each month in the fourth quarter, against the backdrop of travel restrictions between the mainland and Macau easing from late September.
Some of that “momentum” had been carried to the first quarter, prior to the travel advisory notices.
“We do anticipate that hotel occupancy will reach a level similar to October Golden Week last year, for this Chinese New Year period,” he added.
The average occupancy rate of hotels market-wide in Macau fell by 50.4 percentage points year-on-year during the autumn Golden Week holiday period last year, to 43.6 percent, according to the Macao Government Tourism Office.
Earlier on the earnings call, Bill Hornbuckle, chief executive and president of MGM Resorts, had said the “evolving market structure of Macau’s gaming, squarely meets our strengths in the market”.
He added: “MGM China has always been geared to the premium mass segment.”
Mr Hornbuckle further noted: “There is no question that the recent re-emergence of Covid[-19] cases, and government warnings and limited travel during the Chinese New Year holiday season, has impacted demand in the near term.
“But we expect the broader rate of recovery will continue to be gradual and driven by the premium mass market.”
That was understood to be a reference to analysts mentioning likely headwinds for junkets bringing the very top VIP players to Macau, amid China’s crackdown on “cross-border gambling”.
Mr Hornbuckle also reiterated some comments he had made on the third-quarter call, about work on additional suites in the South Tower of MGM Cotai being under way, with the units “ready in mid-2021”.
In other remarks, the group CEO said that although MGM Resorts had “not had people on the ground for nine months” in Osaka, Japan, due to the pandemic, the brand was “the one standing in the gate,” for the gaming licence opportunity there.
MGM Resorts and its local partner have been the sole qualified consortium so far in Osaka, as part of that prefecture’s tilt to host one of the three casino resorts in the first phase of market liberalisation in Japan.
Mr Hornbuckle expected Osaka to have a request-for-proposal phase “some time in the summer,” he added.
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