Macau Casinos See More Losses As China Reinstate Coronavirus Travel Restrictions
Dreams for recovery shattered when the news that China plans to reinstate coronavirus travel restrictions circulated.
Two weeks ago, authorities in the Guangdong province lifted the order that visitors from Macau needed to undergo a 14-day quarantine before entry to the mainland. China has shut down its borders to travelers from Macau on March 15 to prevent the spread of the deadly pathogen.
Stocks of Macau casinos, including Wynn Macau and MGM China, rallied after the announcement. Everyone hoped that things would work out well after the lifting of the ban. Casinos in the world’s largest gambling hub have started welcoming back guests since May because of its low rate of virus infection.
Macau losses hope as China reinstates its travel restrictions
Ninety percent of tourists visiting Macau came from mainland China. Morgan Stanley warned that casinos in the Chinese territory lost nearly $1 billion from April to June because of the travel restrictions aimed at preventing the spread of the novel coronavirus.
Sands China, the Las Vegas Sands unit in Macau, reported $549 million in lost revenue during the second quarter. The casino shut down doors to patrons since February, dragging revenue to near zero.
In the Guangdong province, restrictions were lifted for some travelers, but the individual travel scheme, usually used by casino goers, remained suspended. The coronavirus restrictions cut the number of visitors to 2,000 tourists per day this month, a fraction of the average in last year at 108,000.
No hope for recovery due to travel restrictions
Rob Goldstein, Las Vegas Sands president, said there’s no hope for the recovery of the casinos without the individual travel scheme. Operations of properties of Las Vegas sands, including those at the Venetian and Parisian, saw massive losses in revenue.
Melco Resorts, Wynn Macau, Galaxy Entertainment, MGM China, and SJM Holdings are expected to release financial reports in the coming weeks. Experts believe that they will follow the downward trend. Experts projected that Macau casino operators could only produce over $12 billion, which is not helpful.
The prolonged travel restrictions will continue bleeding millions of dollars from the casinos as they keep paying daily operational costs. The special administration reported no case of the novel coronavirus in the last 100 days, but its neighboring regions, like Hong Kong, reported a sharp rise in transmission. Ferry travel between the two Chines-claimed territories is restricted at the moment.
Experts projected that this is not going going to be a good year for Macau’s gambling industry. Four casinos revealed plans to issue new debt amounting to $4.2 billion because of the impact of the novel coronavirus on their operation.
However, Praveen Choudhary, an analyst at Morgan Stanley, Hong Kong, said the decline in operating expenses from the last quarter could break even the industry’s earnings before interest, taxes, depreciation, and amortization in this quarter.
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