Macau GGR is on track to fully recover in 2024: S&P Global Ratings

Macau GGR is on track to fully recover in 2024: S&P Global Ratings

After remaining in the doldrums during the last several years, Macau casino industry is finally on the right track to fully recover next year. COVID-19 pandemic led to widespread lockdowns and the impact on casino and tourism sector was massive. S&P Global Ratings, an American credit rating agency and a division of financial research giant S&P Global, has stated in its latest report that Macau casino industry’s gross gaming revenue (GGR) recovery is so strong that the metric could approach 90 per cent of pre-Covid levels of 2019 before the end of 2023. Full recovery could be expected by early 2024.

Boosting its outlook for Macau GGR multiple times since the start of this year, S&P Global Ratings said that gaming revenue across the market, including mass guests, premium mass guests, and VIP guests, reached 86 per cent of the pre-Covid levels in the second quarter of this year, thanks in particular to a strong recovery in the mass gaming market.

The ratings agency noted that the mass-market recovery easily outpaced its prior expectation that it would hit 75 per cent of pre-Covid levels in the second quarter of this year.

The newly published report states, “We now assume these revenues will rise to 90%-95% of 2019 levels in the second half of the year. As a result, we now believe mass GGR could recover this year to 85%-90% of 2019 levels, compared with our previous expectation for a recovery this year to 75%-85% of 2019 levels. We expect it to fully recover in 2024.”

Gaming activities in the Chinese Special Administrative Region (SAR) are also showing some signs that the regional recovery has a great momentum and potential. S&P estimated that it could easily reach pre-Pandemic levels next year.

There are a total of six concessionaires that are operating integrated resorts (IRs) in the Chinese SAR, but contributions to the ongoing GGR recovery are obviously not linear across the group. While Q2 earnings reports from the six casino operators have been solid across the board, some clearly led others.

Among the concessionaires that contributed to the Macau recovery cause, NYSE-listed Las Vegas Sands (LVS), the largest operator in the Chinese SAR, delivered robust Q2 results. It remains constructive on the SAR’s long-term trajectory.

Melco’s Q2 mass GGR in Macau reached 84 per cent of the pre-pandemic levels, almost in line with the market. It is expected continue to outperform the market in the next few quarters as well.

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