Looking for silver linings

Sharon Singleton

It’s a term that’s frequently over-used, but if you were a land-based gaming operator in Asia last year, it truly was an “annus horribilis.”

Sharon Singleton
* Sharon Singleton

From government mandated closures, to the onerous social distancing requirements on reopening, through to second waves and continuing travel restrictions, it doesn’t come much worse than that.

Recovery is also painfully slow, with new Covid clusters popping up and crushing hopes for an imminent return to normal travel. 

However, a deeper dig behind the headlines turns up some more pleasant surprises which attest to the resilience of the casino industry and its ability to adapt. 

“Gross gambling revenue in Macau was down just over 79 percent last year, but growth is seeing gradual signs of accelerating into the second quarter.”

Despite the lack of revenue coming in on the top line, all but one of the six operators managed to return to positive territory on an EBITDA level in the fourth quarter.

Asia, GGR, infographic

The territory’s mammoth IRs managed to trim expenses to the bone, keeping the lights on even as government travel policies ensured the customers stayed out. Those restrictions are now slowly beginning to ease and the industry is looking forward with anticipation to the extended May holiday, which this year will be five days instead of the usual three.

Although some of the cut back operating costs will begin creeping back into the business as things return to normal, analysts say the operators should continue to feel the benefit from improved margins for several years to come.

One of the hardest hit jurisdictions in Asia last year was the Philippines where the properties have only been allowed to reopen on an extremely limited basis with invites to selected guests and long-term hotel occupants. 

GGR there slumped almost 90 percent, prompting the Philippine Amusement and Gaming Corp. to consider allowing the casinos to accept online bets from VIP players. The creation of the so-called PIGO licenses was announced at the end of December, though progress has been slow as regulators tread carefully with their move into convergence.

Still, Bloomberry Resorts announced that it too turned in positive EBITDA for Q4, with a 22 percent quarter-on-quarter gain in gambling revenue. The company said it had seen strong support from the local mass market and is convinced the recovery was underway.

Elsewhere in Asia, figures for both Malaysia and Cambodia have been surprisingly strong. Locals are not allowed to gamble in Cambodia and the border is mostly shut to tourism, however GGR there was only down about 50 percent from 2019.

Nagacorp, the operator of NagaWorld in Phnom Penh posted a net profit for the year as a whole, not just Q4, and said its volumes in the mass market segment are back to about 95 percent of pre-crisis levels, while the figure stands at 69 percent for VIP.

The company, which has a monopoly within a 200km radius of the capital, said it had been supported by the large expatriate community in the city as well as by some visitation from East Asia. It also benefits from being one of the few options available for entertainment.

The Hong Kong-listed company said it would support shareholder loyalty by an “unprecedented” payout of 100 percent of profit in the form of dividends. Its founder, Dr Lip Keong Chen is the largest shareholder in the group.

Malaysia too enjoyed strong support from the local VIP market and those who in more normal times may have visited other jurisdictions to scratch their gambling itch. GGR at Resorts World Genting was down about 56 percent last year and analysts are relatively optimistic about the year ahead, especially as it will finally open its outdoor theme park.

As the only player in the country when it comes to casinos and an increasingly strong and diversified non-gaming offering after its Genting Integrated Tourism Plan investments, it’s seen as well placed once the pandemic subsides.

Although there will be no V-shaped recovery to this crisis, which is dragging on longer than anyone predicted, there is light at the end of the tunnel and even in the land-based world the major operators look set to weather the storm intact. 


*Sharon Singleton – Managing Editor, Asia Gaming Brief