Macau Economic Turnaround Hopeful as Vaccine Draws Near
Macau will offer the COVID-19 vaccine for free to residents once it is available in the hopes of a quick economic turnaround.
Macau is a huge gambling destination. It is considered the Las Vegas of Asia and offers visitors a wealth of gambling opportunities. Casinos provide gaming as well as dining, drinks, and entertainment. For many years, Macau has been a go to spot for high rollers and VIPs, which has led to a strong economy. However, once the COVID-19 pandemic began, the economy quickly stalled. Casinos were closed and patrons were unable to frequent the gambling hot spots. Now, officials are relying on an impending vaccination to ensure that visitors can come to Macau once again and the economy will start to grow once again.
In the hope of speeding things along, the Macau Health Bureau has said that vaccinations will be provided to the public for free. The process voluntary but the government is encouraging everyone to participate.
The pandemic has drastically affected the economy of Macau, as it relies heavily on casinos. From January to November, gross gaming revenue of the region dropped by over 80%. Six licensed operators in the city have earned over $27 billion less this year than last year.
Macau has been successful in keeping COVID-19 out, as it can control its borders. Even though it is close to mainland China, it has only seen 46 cases of the virus. All patients have recovered. The reason the economy is tanking so bad is not due to the number of cases but the inability for travel into the region. Because people cannot safely come into Macau without potentially bringing in the virus, tourism has dwindled significantly.
Tourism has dropped so much that there is a more than 86% difference from totals this year when compared to 2019. Hotel occupancy is down 66% and less than 25% of available guest rooms have been filled.
It is unclear where Macau will receive its vaccines. A vaccine backed by China is currently in testing in the United Arab Emirates. It has so far been found to be 86% effective. Countries around the world are focused heavily on developing a vaccine that works so the virus can start to die away.
Wynn Resorts Trying to Recover
Wynn Resorts is an operator in Macau that is trying to see a turnaround. Stock in the company has dropped close to 20% to date and the slump it mainly attributed to the VIP market of Macau going soft. Analysts predict that the company will become less reliant on the VIP market in the future and they could be set up for success by next year and the years thereafter.
The company operates Wynn Palace in Macau via its China arm, Wynn Macau. The Wynn Palace property is the largest casino facility in the world. It relies on affluent visitors to be able to make significant gains with revenues. However, the company is slowing down with VIP activity, especially as there is crackdowns among VIP groups taking place in other areas and political issues among China and the US.
Analysts have estimated that it could be 2023 or beyond before Macau sees the VIP levels return to pre-COVID-19 numbers. This could be an issue, but not one that Wynn should be majorly concerned with. Analysts say that while Wynn Macau is considered a VIP operator, they are effectively a premium-mass driven company.
Last year, around 85% of earnings before EBITDA were generated by mass gaming and non-gaming amenities. Right now, the company is still struggling due to low travel numbers in the region. Hopefully, if a vaccine proves to be effective, then visitors can come in once again and avoid major quarantines before moving on to enjoying gaming and overnight stays.