GGRAsia – Six months plus of bumpy biz for Macau: MGM Resorts CFO

Six months plus of bumpy biz for Macau: MGM Resorts CFO

Dec 02, 2021 Newsdesk Latest News, Macau, Top of the deck

The Macau gaming market will “probably be bumpy over the next six or 12 months” amid travel restrictions linked to the Covid-19 pandemic, said on Wednesday the chief financial officer (CFO) of MGM Resorts International, the United States-based majority owner of Macau casino operator MGM China Holdings Ltd.

“I think it’s going to improve, but it’s unknowable at this point how quickly that will improve,” said Jonathan Halkyard.

He was speaking via videoconference link from Las Vegas, Nevada, during an online session of the Morgan Stanley Global Retail and Consumer Conference.

The CFO noted, referring to the Macau market’s third-quarter earnings season for the six operators there: “We all saw the revenues that were reported recently, operating at kind of 30 percent of 2019 levels – though sequentially it was a bit better – this is a market that has been impaired by the travel restrictions into it, and that’s going to last for a while.”

But he added: “I don’t think any of that speaks to the long-term opportunity associated with Macau: the demand side for Macau generally speaking, is going to be fine going forward.”

The executive said, referring to MGM China’s two gaming resorts; MGM Macau on the city’s peninsula, and MGM Cotai (pictured) in the newer casino district: “We’ve got two big businesses there we’re committed to, we have a great management team. It’s just going to be a tough road for a while.”

Mr Halkyard was also asked about MGM China’s gaming rights, which are due to expire – along with those of its five competitors – in June next year.

He said, alluding to a Macau government consultation paper issued in September on proposed changes to Macau’s regulatory framework for gaming in the city: “On the concession front, I was pleased that back in September we got that process started; we provided our input on the different elements the government had asked us to respond on.”

The CFO added, referring to feedback from the government, and whether a public retender process would be possible prior to the expiry of the current rights: “We think we are going to have a pretty rapid review of that. I don’t know if we will make it by next June. But we feel like our company is in a very good position for concession retendering. We’re taking the process very seriously of course, but we’re very optimistic about it.”

Mr Halkyard was also quizzed about the impact on MGM China’s VIP gambling business of the exit of the Suncity Group junket brand from the Macau market.

He stated: “The reality is that this [VIP junket business] – while it represented a fair amount of revenue in the market – did not represent much EBITDA [earnings before interest, taxation, depreciation and amortisation] in the market; particularly in recent months. So I do think it does call into question in the future the extent of the junket business.”

He added: “But MGM’s business has always been more oriented towards the mass… business, which has much better margins than the junket business.”

The CFO further noted: “I think many would agree that for a while, that’s where the business has been going, so I don’t think it’s a dramatic impact on MGM.”