Macau casino companies are getting heavily in debt, with the effects of the coronavirus pandemic literally destroying their sales while their operating expenses remain high.
All six gambling operators, which are licensed to offer their services on the territory of Macau, reported net losses for the first six months of the year. The news raised concerns about the future of the gambling sector, which has been the main driver of the Chinese autonomous region’s economy.
Because of the Covid-19 situation, the constant flow of travelers, respectively casino patrons, to Macau, has been halted, which left the local casino industry with empty venues and still, the same operating costs. Although gambling businesses in the region are skipping their dividend payments and reducing costs, they still struggle to meet any of the preliminary announced financial targets. According to some experts, the financial difficulties that are being experienced by Macau gambling operators could make it impossible for the industry to proceed with plans to make a more diversified future for itself, despite being one of the most attractive gambling destinations on a global scale.
The Government of Macau shut casino venues in the special administrative region for 15 days in February after the coronavirus infection started spreading there.
Apart from the temporary casino closure, the local authorities took some other actions to tackle the further spread of the infection, including the implementation of an entry ban on foreign visitors. The measures have helped the Government contain the disease, but they seriously affected the usual number of free-spending gambling patrons coming to Macau from mainland China, which led to an enormous over 90% decline in the casino revenues in comparison to the results from the same period a year ago.
Casino Operators in Macau Say They Could Get Heavily in Debt Because of Covid-19 Crisis
One of the largest companies operating in the Macau casino sector – Galaxy Entertainment Group – registered a HK$2.8-billion net loss over the first six months of 2020. This is a significant change in the operator’s earnings in comparison to the same period a year earlier when its net earnings amounted to HK$6.6 billion. According to reports, the average daily operating costs of the company in the quarter from April to June were worth HK$2.5 million.
Sands China Ltd reported a HK$5.5-billion net loss during the first half of 2020. Another major player in Macau’s casino sector – MGM China Holdings – generated a HK$2.8-billion loss. Apart from posting a new loss of HK$3.9 billion, Wynn Macau has revealed that decided not to pay its traditional mid-year dividends. SJM Holdings, however, said it could not be optimistic about its business outlook, as the coronavirus pandemic will most likely keep the earnings generated by casinos, hotels and restaurants in Macau low for the time being.
Some casino resorts operators shared that they are planning to issue bonds in order to remain capable of paying for their daily operation costs. Unfortunately, the move could leave them heavily in debt.
The good thing is that the Chinese Government has started relaxing the previously imposed travel restrictions on Macau. The first China mainlanders, who were allowed to enter the special administrative region, were the residents of the Guangdong Province. As of late September, the restrictions for traveler from Beijing were also eased.
