GGRAsia – Macau drives global gaming despite late restart: Moody’s

Macau drives global gaming despite late restart: Moody’s

Apr 27, 2023 Newsdesk Latest News, Macau, Top of the deck

The gaming industry in Asia Pacific will be one of the sectors to benefit in the coming months, as consumers “continue to selectively splash out on entertainment” after lengthy Covid-related restrictions, says a Wednesday note from Moody’s Investors Service Inc. Growth in the gaming industry “will be fuelled by Macau’s recovery,” it added.

Expansion in the United States gaming market however “will moderate, given record gaming revenue in 2021 and 2022,” stated the institution. “China has been a drag on the gaming recovery, but will now help the broader hospitality recovery stick for longer,” it added.

Macau’s relatively late start on the road to demand recovery – which Moody’s links to Covid-19 protocols largely lifted for mainland China, Macau and Hong Kong in early January – will nonetheless help drive global gaming industry growth in earnings before interest, taxation, depreciation and amortisation (EBITDA) adds the ratings house.

“Gaming industry EBITDA will jump 20 percent to 25 percent over the next 12 to 18 months, compared to 17 percent in 2022,” forecasts Moody’s.

“The expected recovery of Macau and continued recovery of Singapore and other Southeast Asian locations are expected to show outsized growth, given the depressed levels seen since 2020,” stated the ratings agency.

In contrast, it added, U.S. gaming, lodging and restaurants are expected to “grow at a more moderate pace in coming months”.

Moody’s adds however a note of caution that for general consumer spending on leisure – including cruises, hotels, and restaurants, as well as casinos – “the recovery tide is ebbing”.

Inhibiting factors globally, included “an increasingly difficult economic environment characterised by high inflation and rising interest rates”.

“Consumers are still splurging on leisure: for now,” said Moody’s.

The cruise sector and Asia gaming have enjoyed delayed recoveries after lengthy Covid-related restrictions, notes the institution.

“These two segments are largely driving our hospitality forecast for a still robust 16 percent to 20 percent EBITDA growth over the next 12 to 18 months. However, this is a downward revision from our previous forecast of 20 percent to 25 percent for 2023, because U.S. gaming, lodging and restaurants have already cycled through most of their recoveries,” said Moody’s.

It noted risks were “speeding up in the face of a slowing global economy and an increasingly uncertain outlook”.

For 2024, Moody’s expects that worldwide, gaming sector performance will exceed pre-pandemic levels for the first time since the health crisis began in early 2020.