Aug 29, 2017 Newsdesk Latest News, Macau, Top of the deck
Banking group Morgan Stanley says Macau gross gaming revenue (GGR) is likely to experience a sharp rebound this week following the disruption linked to Typhoon Hato, with the VIP sector expected to see a speedier recovery than the mass.
“We think Macau GGR will rebound sharply this week and in September, as the temporary shutdown of casinos or facilities this past week will not have any permanent impact,” said analysts Praveen Choudhary and Alex Poon.
The analysts thought that while mass-market gaming revenue was hurt this month “due to cancellation of some group tours and partial closure of mass floors last week”, the VIP segment would rebound more quickly.
“We expect VIP to recover faster than mass. This, along with additional operating expenses or maintenance, is likely to mean lower earnings before interest, taxation, depreciation and amortisation (EBITDA) margins in the third quarter of 2017,” said in the Tuesday note.
The Morgan Stanley team estimated that Macau GGR in August will see an 18-percent growth in year-on-year terms, down from its previous estimate of 24 percent year-on-year.
Several brokerages mentioned the typhoon shaving anywhere between several hundred basis points (bps) and 600 bps from year-on-year growth in August GGR.
Meanwhile, a note on Monday from analyst David Katz of Telsey Advisory Group LLC suggested that the Macau VIP sector had “demonstrated surprising resilience” following the typhoon.
The analyst noted: “Our sources estimate that the week’s results were impacted by 15 percent to 20 percent and the full month’s results were impacted by approximately 5 percent from the prior-week’s estimates, resulting in GGR growth for August of 19 percent to 24 percent [year-on-year].”
Macau GGR in August 2016 was MOP18.8 billion (US$2.33 billion), according to the city’s gaming regulator, the Gaming Inspection and Coordination Bureau.
Following Typhoon Hato on August 23 – which brought with it winds of more than 200 kilometres per hour (124 mph) – Macau suffered extensive power cuts and interruption to mains water supplies. Some hotels and casino resorts also sustained damage, including to windows, fittings and gardens.
The Macao Government Tourism Office (MGTO) announced on Tuesday that it had agreed with Macau tour agents to resume on September 2 group tours to the city. It said it would contact, respectively, the China National Tourism Administration, and the authorities in Shenzhen in mainland China, and neighbouring Hong Kong, regarding the decision.
“After considering the situation in the [community] – the traffic conditions; the conditions regarding the reception of tourists; the image of the city; as well as the fact that the tourism volume will not be very high after the summer holiday [peak], MGTO has reached a consensus with the tourism industry and will resume on September 2 the tour groups… to Macau by travel agencies,” the tourism bureau said in a press release.
It added that the tour-group hiatus up to and including Friday, was to give the local community “more time to recover, while the industry can strive to repair facilities and resume various services”.
The tourism bureau had initially requested on Friday the suspension until August 30 of group tours to Macau. It had also urged visitors to reconsider their upcoming trips to the city.
Casino resort ops
Several casino operators in Macau confirmed to GGRAsia that either all or most of their properties had resumed normal operations.
In an email to GGRAsia, Melco Resorts and Entertainment Ltd said its properties had been “operating normally since Friday”.
“Our properties had… minor external damage [due to the typhoon]. However, the clean-up cost is manageable,” the firm said.
Regarding the impact Typhoon Hato had on the construction of Morpheus, a new hotel tower at City of Dreams Macau, the company said: “There was a minor degree of damage externally, but it can be repaired within a few days.”
“We halted the construction work at Morpheus to reassign 2,000 construction workers to support the [city’s clean-up] task force as we are eager to support Macau to recover from the typhoon as soon as possible. We do not foresee major impact on the construction timeline,” the casino operator added.
Morpheus, designed by the late Dame Zaha Hadid, is a US$1-billion project and the fifth tower being built at City of Dreams Macau. It is 160 metres (525 feet) high, and will feature approximately 780 guest rooms along with suites, “sky villas” and duplex villas, the firm has said.
The construction of Morpheus was suspended by Macau’s Labour Affairs Bureau for 14 days in July after the on-site death of a construction worker.
Lawrence Ho Yau Lung, Melco Resorts’ chairman and chief executive said on the firm’s second-quarter earnings call in late July, it hoped to open the new hotel – which he said would have space to accommodate up to 50 gaming tables – in the “first quarter or second quarter next year”.
In the meantime, SJM Holdings Ltd stated in an email to GGRAsia that all its casinos, including Casino Grand Lisboa, Casino Lisboa, Casino Oceanus at Jai Alai and Casino Ponte 16, had resumed operations. The exception it said, was one so-called satellite casino – i.e., one of the properties using the company’s gaming licence but operated by third parties – but the group did not identify the venue.
“For Grand Lisboa Hotel, all hotel rooms are in operation, and food and beverage facilities have largely resumed operations,” the firm said.
According to some analysts, the operations of Grand Lisboa and Hotel Lisboa were suspended for a period in the aftermath of the typhoon, due to power and water shortages.
The firm said in relation to its HKD36-billion (US$4.6-billion) first Cotai scheme: “In respect of the Grand Lisboa Palace under construction, the building and its fittings were left undamaged by the typhoon, thus the structure remains safe and intact. Works on the site have been resumed after the typhoon with a focus on ensuring a safe environment for our workers,” it added.
Grand Lisboa Palace will feature “a total of approximately 2,000 hotel rooms and suites, facilities for meetings and conferences, shopping, dining and entertainment, and a casino,” according to SJM Holdings’ interim report filed on Monday.
The construction of Grand Lisboa Palace was suspended for 44 days by the city’s Labour Affairs Bureau following the on-site death a worker from mainland China.
While Ambrose So Shu Fai, SJM Holdings’ chief executive, estimated the new venue could open in the second half of 2018, several analysts have cast doubt on this scenario.
Meanwhile, Sands China Ltd said its Sands Macao property on the city’s peninsula had seen operations “significantly reduced on Wednesday, 23 August due to power and water outage”. In an email to GGRAsia, Sands China confirmed that “hotel operations and customer services… are now resuming normal operations.”
While GGRAsia did not receive a response on operational status from the remaining three local gaming operators by the time this story went online – namely Wynn Macau Ltd, Galaxy Entertainment Group Ltd and MGM China Holdings – Galaxy Entertainment put up a notice on the website of Galaxy Macau, stating that “Broadway Hotel will be closed until further notice”. But the food street in the hotel remained open, said the company.
The firm said regarding Galaxy Macau: “All of our five hotels are fully operating and those customers with hotel reservations will be accommodated.”
The notice added: “As a result of the Grand Resort Deck delayed reopening, guests may wish to rebook their stay for another time.”
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